Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — MINISTRY OF SUPPLY

Mustard Gas

Mr. Hale: asked the Minister of Supply the estimated production of mustard gas in the United Kingdom for the year 1954; how many storage depots exist; and whether production is being maintained at an adequate rate.

The Minister of Supply (Mr. Selwyn Lloyd): It would not be in the public interest to disclose the information for which the hon. Member asks.

Mr. Hale: Is the right hon. and learned Gentleman aware that if the information has not been disclosed, the mustard gas has, and that it has been causing some alarm to the people of Cambridgeshire rather than the people of Siberia; and in those circumstances does not he think that those people who have sustained injury should have some explanation giving the reason?

Mr. Lloyd: I think I understand the incident to which the hon. Member has referred. He really should address Questions about that to the Secretary of State for Air.

Helicopters (Noise)

Mr. Dodds: asked the Minister of Supply whether, in view of the importance of helicopters for inter-city travel, he will make a statement giving details of experiments taking place and progress made in those designed to reduce the noise from helicopter engines.

Mr. Selwyn Lloyd: Important work is being done in this field, in conjunction with the Ministry of Transport and Civil Aviation and the aircraft and aero-engine firms

concerned. We were considerably encouraged by the demonstration of one form of silencer at the South Bank on 24th January. The problems to be surmounted are, however, great. I propose, with permission, to circulate in the Official Report a more detailed statement of the work in hand.

Mr. Dodds: While thanking the right hon. and learned Gentleman for that statement, may I ask him whether he will bear in mind that even if it is possible to apply silencers and do away with any noise, there will be some critics who will complain about the uncanny silence of the helicopter?

Following is the statement:
The causes of the noise generated by helicopters are various, but the two most important are the rotor system and the power generating system. The extent to which we can expect to reduce the noise caused by the rotor system is marginal and our main aim is to find ways of reducing engine noise to the same level as the rotor noise. Care is necessary, however, in designing methods for silencing engines not so to add to the weight of the aircraft and reduce the engine power as to make the helicopter uneconomical to operate.
The demonstration of a silencer on an S.55 helicopter on 24th January showed that the noise of its particular piston engine can be reduced considerably so that, for instance, at 250 feet the residual noise level is about the same as the background noise level in a busy street. The noise is naturally greater during take-off and touch-down but does not seem objectionable at a reasonable distance. Further development is required to evolve a lighter installation.
Similar work is being done by the Bristol Aeroplane Company directed to reducing the noise of the Bristol 173 twin rotor helicopter. Preliminary results suggest that a comparable reduction in noise will be obtained and a lighter installation will be possible.
Propulsion by ducting compressed air through rotor blades and out of the blade tips may offer a considerable reduction of noise. Gas turbine engines with direct drive to the rotor will call for new methods of noise reduction when the aircraft concerned have flown and the level of noise can be assessed. Work done on the silencing of jet turbine engine exhausts by modifying their shapes will, it is hoped, be useful in helicopters which incorporate jet units at the rotor tips.
All possibilities will be explored as the helicopters are developed. Research into the reduction of jet engine noise generally by aero-engine manufacturers, by the College of Aeronautics and by Southampton University, details of which were given to the House in a statement by my predecessor on 28th June, 1954, will also contribute.

New Rifle

Mr. Wyatt: asked the Minister of Supply to what extent the new rifle for use in the British Forces will be manufactured in Britain on exactly the same pattern as the Belgian Fabrique Nationale rifle; and whether the system of continental or British measurements will be used in its manufacture.

Mr. Selwyn Lloyd: Rifles produced in the United Kingdom will be made on the same pattern as the Belgian rifle. They will be manufactured to inch drawings, for the reasons stated by the then Minister of Supply on 7th May, 1954.

Mr. Wyatt: Since they are to be manufactured on inch drawings and not on metric drawings, is not it clear that the parts will not be interchangeable with the Belgian rifle still manufactured in Belgium, and does not this do away with much of the argument in favour of standardisation advanced a year ago by the Government?

Mr. Lloyd: I understand that many of the parts will be interchangeable.

Mr. Wyatt: Is not it clear that not all of them will be interchangeable and that we were told that the great advantage was that they would all be interchangeable?

Mr. Lloyd: The argument about standardisation was always addressed to standardisation with Canada and the Commonwealth countries.

Mr. Strachey: Will the Minister explain why this further alteration and modification was effected, because it has undoubtedly caused great delay, and if it enables standardisation in one direction it would clearly prevent it in another? It seems inexplicable.

Mr. Lloyd: If the right hon. Gentleman will look again at the statement of 7th May, he will see the reasons fully set out.

Mr. Chetwynd: asked the Minister of Supply how many Belgian Fabrique Nationale rifles have been procured; and how many have been ordered from Belgium.

Mr. Selwyn Lloyd: In all, 14,400 of these rifles have been ordered and 4,600 delivered.

Mr. Chetwynd: Can the right hon. and learned Gentleman say why, if the Belgians are not having to modify their rifle, we are having to modify ours? If the need for this new rifle is so urgent, as was stated over a year ago, why have we not gone ahead with orders there instead of playing about in this country as we have done?

Mr. Lloyd: We thought it was better to wait until troop trials had taken place.

Mr. S. Silverman: Has the right hon. and learned Gentleman read the Government's White Paper on defence? If he has, having regard to its contents, will he tell us what these rifles are likely to be use for?

Mr. Lloyd: I hope the hon. Member has read the White Paper with the same attention as I have. Obviously our Armed Forces have to be armed with some conventional weapons.

Mr. Strachey: Can the Minister tell us plainly now why the troop trials he has just mentioned were not undertaken immediately this Government came into office, why they have not yet been undertaken, and why production could not have been begun immediately after those troop trials, which should have taken place three years ago?

Mr. Lloyd: The right hon. Member should put down a Question to the Secretary of State for War regarding the timing of troop trials.

Mr. Callaghan: Has not the real trouble been that the previous Minister was so busy denationalising steel that he shilly-shallied and hesitated in taking decisions for over three years both about rifles and aircraft? Is not the best thing that has happened to the Ministry of Supply since 1951 that the Minister has left it?

Bomber and Fighter Aircraft

Mr. Wyatt: asked the Minister of Supply the nature and number of the modifications intended to extend the performance beyond that originally conceived which have been made to the Swift fighter, the Hunter fighter, the Valiant bomber, the Victor bomber, and the Vulcan bomber, respectively, since October, 1951.

Mr. Selwyn Lloyd: With regard to the V bombers, a number of modifications has been introduced since October, 1951, designed to extend their performance beyond that originally conceived. None of these has delayed production. It would certainly not be in the public interest to disclose their nature. With regard to the Hunter and Swift, there have been no such modifications of any significance since October, 1951.

Mr. Wyatt: How can the Minister say that if modifications are introduced to extend the performance beyond that originally intended that does not cause any delay in production, because obviously it must; and is not he aware that the firm building the Hunter has built a special workshop to deal with the modifications sent through by his Ministry?

Mr. Lloyd: With regard to the first part of the hon. Gentleman's supplementary question, the modifications in the case of the V bombers have been introduced at such a stage of the production process that they have not delayed production. In reply to the second part, I repeat that no modifications of any significance have been introduced for the Hunter and the Swift to extend their performance beyond that originally conceived. That does not mean that there have not had to be modifications, both for safety reasons and in order to bring up their performance to that originally conceived.

Mr. Beswick: Was not the Minister's first answer completely misleading, and was there not a major modification after October, 1951, to the dive brakes, which was decided upon after many of the aircraft had been produced? Why was it that the modification was delayed until so many of these aircraft were standing on the aerodrome?

Mr. Lloyd: My answer was not misleading. I was asked whether there had been any modifications intended to extend the performance beyond that originally conceived. It was that Question which I answered. If the hon. Gentleman wants to put down another Question on another point, I will answer it.

Mr. Wyatt: Is it not clear that the Hunter had a number of modifications made to enable it to fire with four guns instead of two? Was that not intended

to extend its performance beyond that originally conceived?

Mr. Lloyd: The date I gave was October, 1951. The decision about the four Aden guns was taken before October, 1951.

Mr. Wyatt: asked the Minister of Supply when it was first realised by his Department that the Swift fighter Marks 1 to 3 would never be able to fulfil the rôle for which they were required; and what has been the total expenditure on the Swift in research, development, and purchase of aeroplanes for delivery to the Royal Air Force.

Mr. Selwyn Lloyd: It was decided earlier this month that these Marks could not be brought to a standard acceptable for operational use by the Royal Air Force. Expenditure to date on research, development and production on all Marks of the Swift totals about£20 million.

Mr. Wyatt: Is it not clear that there has been an appalling waste of money by the Government on the Swift—£20 million? Is it not also clear that an efficiently conducted Ministry would have realised much longer ago than one month that these Marks would not have come up to the standard required of them, and that an efficient Ministry would have realised that two years ago?

Mr. Lloyd: As to the amount of money spent on the Swift project, the Swift was ordered off the drawing board by the previous Administration—a calculated risk which, in the circumstances, I think they were right to take. As to the question whether the three Marks concerned should have been abandoned earlier, I think that is a matter we can easily debate later this week.

Viscount Hinchingbrooke: Is my right hon. and learned Friend aware that a very large part of the£20 million spent was usefully expended in that it has led to considerable technical and scientific advances in aviation generally, whereas no part of the£30 million spent on groundnuts did anyone any good at all?

Mr. Wigg: Would the right hon. and learned Gentleman be kind enough to tell us, as difficulties have been experienced with the Swift, how it comes about that spokesmen on behalf of the Government have promised in, I believe, 1952 and


1953, that they would be in squadron use? Would the Minister explain the reasons why those promises were given?

Mr. Lloyd: Certainly; because it was hoped up to a recent date that improvements would be made. The first representative Mark 4 did not fly until May, 1953.

Mr. G. R. Strauss: Can the right hon. and learned Gentleman assure us that during the coming debates he will give us a full explanation why these quite intolerable delays have taken place in these aircraft? Will he give us a full explanation?

Mr. Wyatt: An honest one—

Hon. Members: Oh.

Mr. Lloyd: Certainly.

Mr. Wigg: asked the Minister of Supply when super-priority for fighter aircraft which he announced on 5th March, 1952, was extended to bombers; and whether he will make a statement.

Mr. Wigg: On a point of order. May I draw attention to the fact that originally this Question was put to the Prime Minister and, without my consent, it has been transferred to the Minister of Supply? It therefore needs to be amended to agree with the facts and ought to read "which the Prime Minister announced on 5th March, 1952" and not the Minister of Supply.

Mr. Selwyn Lloyd: I am grateful to the hon. Member for his correction. The super-priority scheme has included Canberra and Valiant bombers from its inception and was extended to the Victor and Vulcan in December, 1952.

Mr. Wigg: Is the right hon. and learned Gentleman aware that he has made a very grave statement? The Prime Minister informed the House that super-priority was being given to fighter aircraft. If the Minister will look at Hansard for 5th March, 1952, he will find that statement and, at no time from that date onwards, has any statement been made that super-priority was being extended to bombers, although there was an obscure reference by the Secretary of State for Air in the House of Lords in April, 1952.

Mr. Lloyd: In his statement, the Prime Minister was dealing with the fighter defences of this country. With regard to the question of super-priority to bombers, the hon. Member is perfectly correct; the Secretary of State did state that fact in another place on 3rdApril, 1952.

Aircraft Development and Production (Expenditure)

Mr. Edelman: asked the Minister of Supply the total sums paid through his Department to aircraft companies for the last three years for which figures are available, in the form of payments against development and production contracts, respectively.

Mr. Selwyn Lloyd: The expenditure on the production of airframes and aeroengines and spares therefor, in the three years from April, 1951, to March, 1954, was£84 million,£1295 million and£161 million, respectively. It is not the practice to give details of expenditure on research and development.

Mr. Edelman: Is it not the case that there are vast subsidies of public money concealed in these figures? Is it not time there was a public inquiry into this enormous expenditure for so little return?

Mr. Lloyd: I do not believe the hon. Member is right in the last part of his supplementary question. As to concealed subsidies, the answer I have given deals with the Question which was asked.

Mr. Emrys Hughes: Does it include the cost of bombers at£400,000 each which are now obsolete?

Mr. Lloyd: It includes the cost of all aero-engines, airframes and spares in the relevant years.

Mr. Beswick: Does the figure include the cost of aero-engines, airframes and spares which have been delivered?

Mr. Lloyd: Yes, Sir, the production.

Mr. Beswick: The actually delivered article?

Mr. Lloyd: No, Sir, there are certain sums paid on account, but I should like to see the figures to see whether there is any difference between them.

Mr. Callaghan: No rifles and no aircraft.

Oral Answers to Questions — MINISTRY OF HEALTH

Dentists (Recruitment)

Mr. Page: asked the Minister of Health what steps he is taking to stem the decline in recruitment of dentists for the National Health Service.

The Minister of Health (Mr. Iain Macleod): I would refer my hon. Friend to the answer I gave to the hon. Member for Wythenshawe (Mrs. Hill) on 6th December. I am not yet quite ready to announce the full membership of the Committee, but Sir Arnold McNair has consented to act as Chairman.

Mr. Page: Will my right hon. Friend give further consideration to the question whether there is adequate assistance to dental students in the purchase of dental equipment? Do I understand that it costs£125 and that this might be a deterrent to the starting of studies?

Mr. Macleod: If it is a deterrent in the way my hon. Friend suggests, it would certainly come within the terms of reference.

Chiropody Treatment

Mr. Dodds: asked the Minister of Health what consideration has been given to providing chiropody treatment for elderly people; and with what result.

The Parliamentary Secretary to the Ministry of Health (Miss Patricia Hornsby-Smith): I would refer the hon. Member to the reply given to my hon. Friend the Member for Sutton and Cheam (Mr. Sharpies) on 21st February.

Mr. Dodds: I have read the answer, and I think it is most unsatisfactory. Will the Parliamentary Secretary ask her right hon. Friend to have another look at this matter, bearing in mind that foot troubles can quickly cripple people, whereas proper treatment can give a new lease of life? What financial assistance is given by the Government to local authorities who have introduced this system of treatment?

Miss Hornsby-Smith: At present, the only local authorities who run the system are those which provided this service before 1948 and which were allowed to continue. There has not been an extension since then. My right hon. Friend studies all the problems in the Health

Service, but it is a matter of priority, and other overriding priorities have prevented this additional financial obligation being undertaken.

Mr. Dodds: Most unsatisfactory.

Water Supplies (Fluoridation)

Mr. Dodds: asked the Minister of Health if he will make a statement in respect to the experiments being made in the fluoridation of water; and what progress has been made.

Miss Hornsby-Smith: Fluoridation in three selected areas in England and Wales is expected to start during the summer.

Mr. Dodds: As this is a most important matter, can the hon. Lady not give a little more detail? How many local authorities are going to make a start, and how many experiments are being held?

Miss Hornsby-Smith: The study areas have already been announced and are Anglesey, Darlington and Watford, in England and Wales, and Kilmarnock, in Scotland. The reason it takes some time to bring them into operation is that special equipment has to be provided, and the local authorities are now inviting tenders.

Dr. Stross: Is a list available, which we could see or have placed in the Library, of the fluorine content of water so far as it is available at present, particularly for the major local authorities?

Miss Hornsby-Smith: I will look into the hon. Member's request.

Drug Preparations (Dispensing Equivalents)

Dr. Stross: asked the Minister of Health whether he has noted that exactly similar preparations of some drugs, particularly penicillin, are manufactured by different chemical firms and stocked by dispensing chemists; that these preparations have different names; and whether he will authorise dispensing chemists to dispense an exact equivalent, irrespective of the name on the prescription.

Miss Hornsby-Smith: My right hon. Friend is aware of the position, but he would not feel justified in authorising chemists to dispense preparations other than those prescribed. The matter is primarily one for the prescriber.

Dr. Stross: Is the hon. Lady aware that, certainly so far as oral and stable suspensions of penicillin are concerned, there are four or five which are exactly alike and certainly identical in their therapeutic effects? Is she aware that this may mean that a child suffering from pneumonia cannot get anything to help it for a day or a night or a day and a night when a similar preparation is available for it? What does the Parliamentary Secretary think ought to be done in such a case?

Miss Hornsby-Smith: Under the present code of the chemists, it would be quite unethical for a chemist to transpose one preparation for another that was ordered by the medical practitioner. In a case of that kind, there is certainly no reason why the chemist could not telephone the doctor and ask whether he would agree to change to the comparable preparation.

Dr. Stross: Would the Parliamentary Secretary and her right hon. Friend go further and make representations to the appropriate sub-committee of the British Medical Association to give this matter full consideration?

Miss Hornsby-Smith: It is a much wider problem than appears in this one item; it is against the professional code of the chemist. The National Health Service Acts do not authorise a chemist to substitute another preparation for one which is ordered and I do not think that generally my right hon. Friend could advise such a procedure.

Doctors (Merit Awards)

Mr. Beresford Craddock: asked the Minister of Health on what basis the Distinction (Merit) Award is given to consultants in the National Health Service over and above their salaries; and why the identity of the doctors granted these awards from public funds is not published.

Mr. Iain Macleod: The committee set up to recommend awards is required by its terms of reference to base its recommendations on professional distinction. In my view, publication of names would not be in the best interests of the National Health Service.

Mr. Craddock: As the grants are paid from public funds, what possible objection is there to publishing the names of the recipients?

Mr. Macleod: The objection, surely, is that if it were known which consultants got class A, class B and class C awards, patients might think that, according to which consultant was looking after them, they were getting different forms of treatment. That would not be the case, because other factors than clinical ability are taken into account. That view, I think, has always been held by my predecessors, and I believe it to be right.

Mr. Beresford Craddock: asked the Minister of Health whether he is aware that doctors of the highest distinction in the employ of the Medical Research Council are not eligible for Distinction (Merit) Awards in the same way as consultants in the National Health Service; and whether he will take steps to provide for such, or similar, grants to be made in order to remove this anomaly.

Mr. Iain Macleod: Subject to rules of which I am sending my hon. Friend a copy, doctors employed by the Medical Research Council are eligible for distinction awards if they hold honorary consultant appointments in the National Health Service. Apart from this, their remuneration is a matter for the Lord President.

Occupational Centres, Wales (Mentally Defective Children)

Mrs. White: asked the Minister of Health how many occupational centres for mentally defective children are open in Wales; and how many are projected.

Miss Hornsby-Smith: Six are open; a further three are known to be proposed by local health authorities.

Mrs. White: Where it is not possible to serve an area by occupational centres, what encouragement is given to the local authority to provide home treatment?

Miss Hornsby-Smith: Generally, this is a matter for the local authority under educational arrangements and not so fully under our arrangements, but if the hon. Lady puts a Question on the Order Paper I will look into the position in Flintshire, with which I am sure she is particularly concerned.

Oakwood Park Colony, Conway

Mrs. White: asked the Minister of Health what progress has been made with the Oakwood Park Colony for mental defectives at Conway.

Mr. Iain Macleod: Adaptations costing£62,000, to provide accommodation for 184 patients and the necessary staff, began on 17th December last and are expected to be completed by December next.

Mrs. White: Can the right hon. Gentleman say what proportion of the accommodation is for children and what proportion is for adults?

Mr. Macleod: Not without notice. In the end it is intended to accommodate up to 500 or 600, but perhaps I can write and let the hon. Lady know what proportion of that number will be children.

Colonial Medical Service (British Doctors)

Mr. J. Johnson: asked the Minister of Health whether, in view of the growing numbers of unemployed among British doctors, he will consult the Secretary of State for the Colonies regarding their being engaged in the service of Colonial Governments.

Mr. Iain Macleod: My right hon. Friend the Secretary of State for the Colonies and I already consult as necessary on the needs of the Colonial Governments for medical staff, and vacancies are, of course, publicly advertised in all appropriate cases. As regards medical manpower generally, the hon. Member will be aware of the terms of reference of the Committee whose establishment I announced a week ago.

Mr. Johnson: Is the right hon. Gentleman aware that there are 200 applications for each vacant job today in the United Kingdom? I she further aware that there are some 61,000 people per doctor in Nigeria and that things are worse in the Cameroons, where there is one doctor for every 71,000 of the population? Would the right hon. Gentleman ginger up matters and set up a working party to investigate the question of seconding doctors to the Colonies, particularly to West Africa?

Mr. Macleod: All posts are advertised and any doctor can apply. It is not within my competence—and I hope that

the hon. Member does not seek to imply it—to direct doctors to go to any particular area. As to general matters of medical manpower, as the hon. Member knows, I have set up a committee.

Mr. Johnson: Is the right hon. Gentleman not aware that people in the Colonies think that the present scheme is not working? Will he not consider some financial inducement, perhaps a settlement scheme, to induce doctors to go out to the Colonies?

Mr. Macleod: The problem is largely one for the Secretary of State for the Colonies, and I will certainly bring to his notice the suggestion which the hon. Member has made.

Medical Manpower Committee

Mr. Gower: asked the Minister of Health (1) why the committee to inquire into the number of doctors likely to be engaged in medical practice in the future contains three members who have been associated with health administration in Scotland, eight members who have been associated with health administration in England, and no members who have been associated with health administration in Wales; and if he will make a statement;

(2) in view of the official recognition of Welsh problems in health administration by the institution of the Welsh Board of Health, if he will consult with the Minister for Welsh Affairs about the Committee which he has set up to inquire into the number of doctors likely to be engaged in medical practice in the future, and particularly about the advisability of adding some Welsh members to this Committee.

Mr. Iain Macleod: The members of this Committee have been appointed solely on their personal qualifications and not as representatives of particular areas or interests. I am confident that they will take full account of any points special to Wales, and that the interests of the Welsh health services which, through the Welsh Board of Health, are my direct responsibility, will not be prejudiced in any way.

Mr. Gower: Is my right hon. Friend aware that, however these men have been appointed to the Committee, in fact it contains three men who have been connected with Scottish health administration and a large number who have been


associated with English health administration? Is he aware that this is regarded in Wales, by people who are not nationalists, as a singularly tactless and unnecessary affront to Welsh opinion?

Mr. Macleod: As regards the first part of the supplementary question, any high-level committee, particularly one dealing with medical matters, would be bound to have a large number of Scots upon it. As far as the Welsh point of view is concerned, it is true, of course, that this matter has not been dealt with in any way upon a regional basis. Wales is one of the 14 regions in England and Wales and the Committee is so small that I do not think it practical to add to it.

Mr. D. Jones: Did the right hon. Gentleman consult the Minister for Welsh Affairs? If not, why not?

Mr. Macleod: Yes, Sir. All these proposals are notified to my colleagues, including the Home Secretary.

Coal-Gas Poisoning

Miss Bacon: asked the Minister of Health how many people have died during the last year as a result of accidental coal-gas poisoning; and how many such non-fatal accidents have been reported.

Mr. Iain Macleod: The provisional figure of deaths registered in the 12 months ended 30th September, 1954 is 669. The information asked for in the second part of the Question is not available.

Miss Bacon: Is the right hon. Gentleman aware that there is considerable public anxiety at the increasing number of this type of accident? Has he any suggestions to make on the provision of adequate safeguards in respect of coal-gas?

Mr. Macleod: Any question that is directed to the cause of these unhappy accidents is one naturally for my right hon. Friend the Minister of Fuel and Power.

Disabled Ex-Service Men (Motor Cars)

Mr. Simmons: asked the Minister of Health (1) how many disabled persons have been supplied with motor cars since the responsibility for their supply was transferred to his Department;

(2) how many disabled persons, other than those with a double leg amputation, one above the knee, have been supplied with motor cars because of severe disabilities since the responsibility for their supply was transferred to his Department.

Mr. Iain Macleod: In total 91 cars have been issued, 76 of which were provided for pensioners who were not double amputation cases.

Mr. Simmons: Is the Minister satisfied that he has now sufficient cars to meet the real needs of these men? Have there been any cars ordered and supplied from the makers since the merger between the two Ministries, and are they still granted only to ex-Service amputees and patients?

Mr. Macleod: The qualifications have not altered since the previous arrangements or, indeed, since the previous Government were in office. The main point is that all applications which qualify have been met, although sometimes there is a delay of not more than a week or two before delivery.

Mr. Chetwynd: Can the right hon. Gentleman give the figures for ex-Service men and for National Health cases?

Mr. Macleod: All these cars are for ex-Service men.

Oral Answers to Questions — HOSPITALS

Personal Case

Mr. Wade: asked the Minister of Health why, in view of the independent medical report from a leading specialist, the mental deficiency order under which Kathleen Bradley, St. Margaret's Hospital, Great Barr, Birmingham, has for many years been detained, though at present allowed out on full licence, has not been discharged.

Mr. Iain Macleod: I understand that this case was recently considered by the board of control, who decided that the patient was still in need of the protection afforded by the order.

Mr. Wade: Is the right hon. Gentleman aware that this unfortunate woman has been detained more than twenty-one years and there does appear to be evidence at least to suggest that she should never have been detained? Is that to be reviewed? At the same time, may I take


the opportunity of asking if the Minister is quite satisfied that, pending the report of the Royal Commission, everything possible is being done to ensure that there are not individual cases of injustice or detention without just cause?

Mr. Macleod: The individual case is due for review before 31st March by the Board on the reports of the visiting justices. It is for the visiting justices, if they so wish, to hear evidence or any representations from the hon. Member or anyone else who would like to make them. On the general point, of course, I cannot give a categorical assurance. All I can say is that, to the best of my belief, that is so. I would be most anxious to investigate any case brought to my notice.

St. Michael's Hospital, Lichfield (Boiler Equipment)

Mr. Snow: asked the Minister of Health when new boiler equipment will be supplied to St. Michael's Hospital, Lichfield.

Mr. Iain Macleod: I hope that this equipment will be renewed as part of a general scheme for improving the heating services which is under discussion with the regional hospital board.

Mr. Snow: Is the right hon. Gentleman aware that on 15th April last the Parliamentary Secretary said that the delay, which even at that date had taken place, was due to the need to clarify the intentions of the board in relation to this hospital? A year has gone by and the committee concerned feels frustrated at the lack of action by the Ministry in this matter.

Mr. Macleod: I am afraid I cannot accept the criticism implied, because there has been considerable discussion as to whether the scheme proposed by the board was or was not over-elaborate. What I hope will be the end of the matter is that an early discussion has been arranged and, I hope, early action will follow.

Orthopaedic Treatment, Birmingham

Mr. Snow: asked the Minister of Health the number of persons on the waiting list of the Birmingham Region for orthopaedic operations as at the last convenient date; and at the same date for each of the previous four years.

Mr. Iain Macleod: Separate figures for orthopaedic operations are not available, but, with permission, I will circulate figures of those awaiting orthopaedic treatment in the Official Report.

Following are the figures:

Separate figures of those awaiting orthopaedic operations are not available.

Figures of those awaiting orthopaedic treatment on 31st December in each year are as follows:

—
Regional Hospital Board Hospitals
United Birmingham Hospitals


1950
…
3,009
24*


1951
…
2,572
35*


1952
…
2,488
34*


1953
…
2,711
195


1954
…
3,306
263


* Figures for the Children's Hospitals only: figures for other hospitals not available.

Maternity Wards (Identification of Babies)

Mr. Collins: asked the Minister of Health what new instructions he has now issued as the result of his investigations into the various methods of identifying babies in maternity hospitals; and if he will make a statement.

Mr. Iain Macleod: I am glad to have this chance of giving the result of my inquiries. The most common and satisfactory system seems to be to attach a bracelet (or two bracelets) to the baby at birth (or to both mother and baby), with a corresponding label for the cot. The sewing of a marked tape round the wrist seems both simple and effective in the great majority of cases. Recent errors seem to be due, not to defective arrangements, but to a failure to carry them out properly. More elaborate arrangements would have no advantages, and indeed might increase the possibilities of error; the important point is that hospital staffs should be most careful in first making out the bracelet and label and in subsequently checking them from time to time. These points have been brought to the attention of the hospitals concerned through discussion at meetings between my officers and those of hospital boards.

Mr. Collins: Since the Minister seems to have decided that the bracelet method is the best would he say whether it is


now being treated as standard in all hospitals? Can he also decide on the particular kind of bracelet method which should be standardised, so that nurses on moving from one hospital to another are familiar with the type of bracelet that is used?

Mr. Macleod: It is the general practice here and abroad, but it has not been laid down as absolutely standard. The problems that have arisen so far have been because nobody looked at the bracelet, and not because the bracelet was not there. Clearly, we could festoon babies with bracelets, but if nobody looked at them the difficulty could still arise.

Lieut.-Colonel Lipton: Is there any reason why the practice should not be uniform in all hospitals? Why this wide variety of methods that is at present employed, which puts a premium on mistakes?

Mr. Macleod: I should not have thought that that was so. There are different variations, but nearly all hospitals in this country have one or other variant of the bracelet method.

Mental Hospitals (Diet Allowance)

Mr. Collins: asked the Minister of Health if he is aware that in mental hospitals, management committees are still required to keep their expenditure on provisions within the 1948 limit of 2s. 5d. per person per diet day; and if he will state, for July, 1951, and January, 1955, respectively, the sum required to purchase the amount of similar provisions which could be purchased for 2s. 5d. in July, 1948.

Mr. Iain Macleod: As I have previously explained, there is no fixed diet allowance for mental hospitals, and it is for hospital management committees to determine how best to spend the sums allocated to them by the regional boards. The second part of the Question, therefore, is not relevant.

Mr. Collins: Is the Minister aware that I have a copy of a letter from a regional hospital board which makes precisely the restriction which I noted in the Question, and that that restriction of 2s. 5d. per diet day has to my knowledge been in operation in that region for the last four years? Is the right hon. Gentleman further aware that, since the costs of basic

foods have increased by 50 per cent. over the period concerned, in terms of 1948 this means a figure of 1s. 8d. per diet day now? Will the Minister look into this question, because it is brought about by shortage of money and is causing considerable difficulty and there is not sufficient food for patients?

Mr. Macleod: I suppose, if one puts one's mind to it, one could get more inaccuracies into a Supplementary Question, but it would be extremely difficult. The figure of 2s. 5d. relates to the costing returns for 1953–54. The earliest return is for 1950–51 when, as far as one can make out, the comparable figure would be, not 2s. 5d., but 1s.9d. There are no records before 1951 to apply back to 1948, but, if there were, the figure would no doubt have been lower still.

Mr. K. Robinson: Is the Minister aware that there is a growing awareness in the hospital service that the standard of catering and the costs of provision in mental hospitals and mental deficiency hospitals are too low? Will he use what influence he can—perhaps, in the form of a circular—to bring this matter to the attention of regional hospitals and management committees?

Mr. Macleod: That is another matter but one with which I have a good deal of sympathy. I will look into the hon. Member's suggestion.

Capital Development Schemes

Mr. K. Robinson: asked the Minister of Health if he is aware that some regional hospital boards have schemes of major capital development ready for immediate implementation or sufficiently advanced to permit work to commence during the coming financial year; and, in view of this, if he will reconsider his decision to delay the expansion of hospital building and modernisation until the year 1956–57.

Mr. Iain Macleod: I know of no major hospital building scheme outside the existing 1955–56 programme that is ready for immediate starting. If any of those for which I have recently asked Boards to bring plans to completion are ready to start before 1956–57 I will consider whether it is possible to fit them into the 1955–56 programme.

Mr. Robinson: Is the right hon. Gentleman aware that our pleasure on this side of the House at the fact that he has at last managed to extract some more money from the Chancellor is somewhat mitigated by the fact that it is in the form of a post-dated cheque? Is the right hon. Gentleman aware that there is a scheme in the region with which I am associated which we could put to contract straight away but that it has been turned down by his Ministry?

Mr. Macleod: None of the schemes for Clare Hall, West Herts and so on, which I am sure the hon. Gentleman has in mind, have gone to tender and, therefore, they are not ready for immediate starting. If satisfactory tenders are obtained for 1956–57, and if, as I have said in my answer, they are ready to start, I will look into the question whether we can get them into the 1955–56 programme.

Nursing Staff

Mr. A. Roberts: asked the Minister of Health how far the number of mental nurses, engaged to date, meets the normal requirements of our mental hospitals.

Miss Hornsby-Smith: There is still a shortage which has been estimated at about 10,000.

Mr. Roberts: What steps are proposed to be taken to stimulate recruitment for mental nursing?

Miss Hornsby-Smith: There are several schemes in operation at the moment. First, the increased capital expenditure on the mental treatment side will provide better accommodation, which will help tremendously in recruiting. We hope that good results will be obtained from the publicity plans this year. They include an exhibition which is being run by the Ministry to arouse interest in mental nursing. Several pioneer schemes are also being undertaken under the auspices of the General Nursing Council in connection with joint training schemes.

Mr. Shurmer: Is the hon. Lady aware that if something is not done very quickly we shall have no nurses at all soon in our mental hospitals? We in Birmingham are very short-staffed. Is she aware that nurses are continually leaving and that something must be done soon?

Miss Hornsby-Smith: We share the hon. Member's concern. The figures are

going up, although slowly, and we welcome any support for these campaigns to endeavour to persuade people to come forward and join the mental nursing services.

Welsh Building Projects

Mr. Gower: asked the Minister of Health what proportion in capital cost of the new hospital building programme recently announced by him will be in Wales; and what is his estimate of the number of extra beds to be provided in Wales and England, respectively.

Mr. Iain Macleod: Until I have received and considered the proposals of all hospital boards, I cannot say what proportion of the new building programme will consist of Welsh projects.

Captain Pilkington: Is my right hon. Friend aware that some very important areas have been omitted from the scheme, about which he will be receiving representations?

Mr. Macleod: I am sure that there are. I have said many times that the lists which I have put forward are not in any way exhaustive.

Doctors (Salary Scales)

Mr. Bowden: asked the Minister of Health what steps he has taken to satisfy himself that the present salary scales are sufficiently attractive to encourage young doctors to enter hospital service rather than enter general practice.

Mr. Iain Macleod: The salaries of hospital medical staff are a matter for the Medical Whitley Council in the first instance; but I know that the need to keep a proper balance in recruitment was an important factor in the agreement on increased salaries reached by the Council a year ago.

Mr. Bowden: Is the right hon. Gentleman aware of the difficulties which are experienced by many hospitals in the provinces in obtaining and recruiting junior medical staff?

Mr. Macleod: Indeed I am. It would be a mistake, however, to link those difficulties entirely with problems of pay. In many cases they arise because the hospitals are remote or unattractive in themselves. As far as pay is concerned,


the agreement last year did a good deal to restore the balance which was upset by the Danckwerts award.

Mr. Snow: Is the right hon. Gentleman aware that it would be a very great pity indeed if the provision of practitioners for the countryside were in any way jeopardised? Is he aware that there are still many rural areas under-doctored?

Mr. Macleod: Yes, Sir.

New Hospitals, West Midlands

Mr. Simmons: asked the Minister of Health why there is no provision for new hospital accommodation, excepting for the projected mental hospital, in the area of the West Midland Regional Hospital Board in his new programme.

Mr. Snow: asked the Minister of Health why, in the new programme, plans for the construction of hospitals other than for mental purposes were not included for the Birmingham region.

Mr. Iain Macleod: I made it clear at the time that the list of projects I gave on 9th February was not comprehensive, and on receipt of proposals from hospitals boards I shall consider what other projects can be included.

Mr. Snow: Earlier this afternoon the Minister conceded to me that there was a very long delay in settling one relatively ordinary matter of bringing a hospital up to date? Is he aware, broadly speaking, that the public is very concerned about the omission of provision of new hospitals in the Midlands, and even taking the pre-war situation into consideration, does he realise that the Midlands have always been short of hospitals compared with older industrial areas?

Mr. Macleod: Apart from the mental hospital to which reference is made in the Question, I specifically indicated a new general hospital at Coventry, which is of great importance in this particular area. I cannot give the final answer about many large projects in the Midlands or anywhere else until the regional board's proposals are in front of me.

Improvement Schemes, Dudley and Stourbridge

Mr. Wigg: asked the Minister of Health what plans for improved hospital accommodation in Dudley and Stour-

bridge are contemplated; and whether he will make a statement.

Mr. Iain Macleod: Five schemes, costing in all more than£15,000, for improvements at three hospitals in the Dudley and Stourbridge group, are included in the regional hospital board's programme. The board also has under consideration a proposal for a major scheme for an out-patient and casualty department at Corbett Hospital, but I cannot say at present when this scheme is likely to start.

Mr. Wigg: Is the right hon. Gentleman aware that in Stourbridge we are all very disappointed because nothing has been done to get on with the erection of the out-patient and casualty departments at the Corbett Hospital? Will he do something to speed this up, because it serves a very wide area and the need is getting desperate?

Mr. Macleod: I am very conscious of the need there, and I am sure the regional board will give this particular scheme substantial priority, but whether it will be high enough to figure in the first part of the regional board's list is something I do not know yet until I see its proposals.

Mr. Simmons: Trade unionists in the area—and this is a heavy industry area—are very much concerned about this matter and already the right hon. Gentleman has had representations from the Dudley and Stourbridge Trades Council on the matter. Will the right hon. Gentleman give weight to the opinion of trade unions?

Mr. Macleod: Yes, Sir, I will be very glad to do so.

Oral Answers to Questions — LEGAL AID

Mr. E. Fletcher: asked the Attorney-General whether he is aware that the operation of the Regulations made under the Legal Aid and Advice Act, 1949, with regard to the contributions exacted from an assisted person as a condition of a grant of a legal aid certificate often cause hardship; and whether he will take steps to modify the regulations and, in particular, to give the National Assistance Board greater discretion in the matter.

The Attorney-General (Sir Reginald Manningham-Buller): No, Sir. My noble Friend the Lord Chancellor agrees with


the view expressed by the Legal Aid Advisory Committee in their Third Annual Report that the public money available should go first towards extending the scheme to those parts of the Act not yet in force rather than to amending the parts already in operation.

Mr. Fletcher: I am not sure whether the Attorney-General has answered Question No. 43 or No. 44. If the Attorney-General was really answering No. 43, his answer was far more appropriate to No. 44. No. 43 deals with regulations.

The Attorney-General: The hon. Gentleman had better look at Question No. 43 again, when he will see that the answer I gave was to the right Question.

Mr. Fletcher: Is the Attorney-General aware that I have already had one letter from him apologising for the mistakes made in the assessment by the Board. That was in respect of a man earning£8 a week who was wrongly assessed at£124. The Attorney-General said he should have been assessed at only£62. Is the right hon. and learned Gentleman aware of many cases of great hardship through over-assessment, which suggests that either the regulations are wrong and ought to be changed, or that they are being badly administered?

The Attorney-General: I wrote to the hon. Gentleman in regard to one case which was brought to my notice where the National Assistance Board made an error in the assessment. The hon. Gentleman's Question asked me to take steps to modify the regulations and to give the National Assistance Board greater discretion in the matter. That is the Question I am answering. I have answered it, and I adhere to that answer.

Mr. Turner-Samuels: Arising out of that reply and concentrating particularly on the word "hardship," of which there are many instances, does the right hon. and learned Gentleman not agree that, apart from the question of regulations, the sums fixed by these committees are, in fact, exceeding the amount which the litigant would have to pay to a solicitor direct without any legal aid at all? Is it not correct that this is continually happening in divorce cases?

Mr. Speaker: The hon. and learned Gentleman cannot make a speech.

Mr. Turner-Samuels: Would the right hon. and learned Gentleman look into those cases and try to remedy them?

The Attorney-General: Of course I will look into any case sent to me, as I did in the case sent to me by the hon. Gentleman who asked this Question, but the tenth paragraph of the Third Report of the Advisory Committee said this:
We still consider that the first call upon Government funds should go not to alleviate conditions under the existing schemes but towards extending it to those parts of the Act not yet brought into force.
It adheres to that in the Fourth Report, about which the Question is asked.

Mr. E. Fletcher: asked the Attorney-General whether he is aware that the latest Report of the Law Society on the operation of the Legal Aid and Advice Act containsan urgent recommendation that a legal advice scheme should be set up; and what steps he is proposing to take in the light of this recommendation.

The Attorney-General: I would refer the hon. Member to the reply I gave the hon. Member for Norfolk, Central (Sir F. Medlicott) on 31st January.

Mr. Fletcher: Does that mean that the Government are neither going to alleviate the cases of hardship which arise under the present scheme nor extend the scheme of legal aid? Are they going to do neither one nor the other?

The Attorney-General: I announced some time ago the extension of legal aid to the county court.

Mr. E. L. Mallalieu: Is the right hon. and learned Gentleman aware that, although since Magna Carta Englishmen have had certain rights, it was only after the passing of the Legal Aid and Advice Act that they were able to enforce them? Would he not agree that it is desirable at the earliest possible moment to extend the right to have legal advice authoritatively so that all citizens may know what are those rights which they are entitled to enforce at law?

The Attorney-General: As one of those who signed the Rushcliffe Committee's Report, I am naturally in favour of legal aid and advice being provided as soon as it can be.

Oral Answers to Questions — MILITARY AIRCRAFT PRODUCTION (DEPARTMENTAL RESPONSIBILITY)

Lieut.-Colonel Lipton: asked the Prime Minister which Department of State has been responsible for the production of military aircraft since November, 1951.

Mr. Selwyn Lloyd: I have been asked to reply.

The Ministry of Supply.

Lieut.-Colonel Lipton: As the Department has been so successful that we have now in some respect or the other the best defence in the world, why was it necessary to move the former Minister of Supply to a more sheltered spot and to produce a new Minister of self-defence to explain away the Government's magnificent record in this field?

Mr. Lloyd: I do not think hon. and right hon. Gentlemen opposite always thought that the Ministry of Housing and Local Government was a sheltered spot.

Oral Answers to Questions — HOUSE OF COMMONS CATERING

Mr. Collins: asked the hon. Member for Woolwich, West, as Chairman of the Kitchen Committee, why the charge for beef in the House of Commons Dining Room has been increased from 2s. 9d. to 3s. 3d. per portion.

Mr. Steward: When the price of 2s. 9d. was fixed we had to accept a high percentage of frozen foreign meat. We are now able to obtain a continuous supply of prime Scotch beef. The cost is higher, and we have been obliged to increase our prices.

Mr. Collins: Is the hon. Gentleman aware that we have been constantly assured from the Government benches that the increase in price has been insignicant and there seems to me to be some delusion on his part? Therefore, will he consult his right hon. Friend the Minister of Agriculture and ascertain where this cheap meat can be found? If he finds that his right hon. Friend is wrong, would he educate him about the facts of life?

Mr. Burden: Are my hon. Friend and the Members of the Kitchen Committee not to be congratulated on the fact that last year, for the first time for many years, the Catering Department of the House has been run without a loss?

Mr. Wigg: As an English Nationalist, may I protest against the sale of Scottish beef in the dining room?

Mr. Crouch: asked the hon. Member for Woolwich, West, as Chairman of the Kitchen Committee, what percentage of white cheese used by his department is home-produced; what percentage is Empire; what percentage is foreign; and what percentage of blue vein cheese used is home production, Empire, and foreign, respectively.

Mr. Steward: The answer is:
White Cheese—70 per cent. Home, 20 per cent. Empire, 10 per cent. Foreign.
Blue Vein Cheese—50 per cent. Home, 50 per cent. Foreign.

Mr. Crouch: May I ask my hon. Friend, in view of the ample supplies of good English cheese now available, and since it has fallen by 3d. a lb. during the last 10 days, if he can increase the amount of English cheese used by the Kitchen Committee? Furthermore, is he aware that English blue vein cheese, such as good Stilton and Wensleydale, is far superior to anything we can import from abroad?

Mr. Steward: Of the white cheese, only 10 per cent. is foreign, and that includes cheeses of the type of Camembert which is popular with some hon. Members. The foreign blue vein cheeses include Gorgonzola and Danish Blue, which also are preferred by certain hon. Members.

Oral Answers to Questions — COURT PROCEEDINGS (PUBLIC ADMISSION)

Captain Kerby: asked the Attorney- General whether he will set up a commit tee to consider what amendments are necessary in the law in order to secure that criminal charges are always heard in public court except when the court, on application being publicly made to it, otherwise orders.

The Attorney-General: No, Sir. I have no evidence suggesting that any such amendment of the law is desirable, and I


do not consider that any useful purpose would be served by appointing a committee to study the question.

Oral Answers to Questions — PENSIONS AND NATIONAL INSURANCE

Republic of Ireland Residents (Benefits)

Mr. Langford-Holt: asked the Minister of Pensions and National Insurance whether residents of the Republic of Ireland are excluded from benefits of the National Insurance Act by his regulations under Section 29 of that Act.

The Minister of Pensions and National Insurance (Mr. Osbert Peake): No, Sir.

Rent Allowances Increase (Tenement Property)

Mrs. L. Jeger: asked the Minister of Pensions and National Insurance why increased rent allowances are being paid by the National Assistance Board on be half of five tenants in a tenement, of which he knows the name, when more than 30 certificates of disrepair have been issued in respect of identical flats in the same block; and what steps he is taking to ensure that further public money is not disbursed to landlords who do not comply with the conditions of the Housing Repairs and Rents Act, 1954.

Mr. Peake: The decision on the amount of assistance to be granted in a particular case is by statute a. matter for the Board and their officers, and I have no power to intervene. I am however informed by the Board that it is satisfied that, in the circumstances of the cases referred to, the decision to increase the allowance for rent was justified.

Mrs. Jeger: Is the Minister aware that every tenant in this block who asked for a certificate of disrepair was issued with one, and that in these five cases of old and sick people the reason certificates were not issued was that they were not applied for? How can the Minister justify the payment of this increased allowance to the landlords in respect of property which is manifestly not entitled to an increase under the Act?

Mr. Peake: As I have said, this is a matter under the statute for the Board,

and the Board informed me that it was satisfied that, in the circumstances of the cases referred to, a decision to increase the allowance was justified. It does not necessarily follow that all the flats in a block are in a similar state of repair or disrepair at any given moment, and I would remind the hon. Lady that the National Assistance Board has for more than 20 years been dealing with the difficult question of what is the permissible rent under the Rent Restrictions Acts, and doing it, I think, to the general satisfaction.

Mrs. Jeger: Is the Minister aware that these certificates of disrepair were issued in respect of the condition of the lavatories and the staircases and the shared washhouses in this tenement block, and that, therefore, there can be no question that these five flats are in any different condition from those in respect of which no increases are being paid? Is the Minister able to point out to the Board that in all the cases where tenants are paying their own rent in this block, not one is paying an increased rent, and that it is only when the money is coming from Government funds that the landlord is getting the increase?

Mr. Peake: I will certainly convey to the Board the information given me by the hon. Lady, and I will invite the Board to take it into consideration.

Mr. J. Griffiths: Whilst appreciating that the National Assistance Board has wide experience in these matters, surely the Minister is not condoning any step in which the Board is voting public money for anything which is not legally due?

Mr. Peake: By no means, but I was pointing out that the Board has been confronted with this problem of controlled and permissible rents and increases in rent during the whole of its existence.

Mr. Glenvil Hall: Are we to understand that the first time these facts were brought to the notice of the Minister was when my hon. Friend pointed them out to him?

Mr. Peake: The information conveyed in the supplementary questions is new to me, but the facts as stated in the hon. Lady's original Question have been known to me for some time.

Silicosis and Pneumoconiosis, South Wales

Mr. J. Griffiths: asked the Minister of Pensions and National Insurance if he is aware of the concern that is felt in South Wales at the increasing number of cases in which coroner's courts have found that the death of coalminers was due to, or accelerated by, silicosis or pneumoconiosis and in which the medical boards make contrary decisions; and whether he will consider the setting up of a competent body to investigate and report on the criteria used by the boards in arriving at their decisions.

Mr. Peake: I am aware that for some time concern has been felt in South Wales on this matter. I have had discussions with my right hon. and gallant Friend the Home Secretary and his predecessor about it. A circular was issued to coroners in October, 1954, drawing attention to the importance of employing experienced pathologists in cases of this kind. I think we must wait and see the effect of this circular before considering any further steps.

Mr. Griffiths: The information available to me is that even since those steps have been taken this disparity is continuing and is causing widespread concern, indeed despair. May I ask the Minister whether he would not reconsider his answer, and whether he does not think the time has come for an examination of the criteria by a competent body? Local feeling is very strong about this, so would he consult his medical advisers regarding a closer examination of this problem?

Mr. Peake: I am just as much concerned as the right hon. Gentleman about this matter, which causes a great deal of distress. If it will interest the right hon. Gentleman, I will send him a copy of the circular which the Home Secretary has issued to the coroners. He, as well as I, is aware that coroners are independent judicial officers, and there is great difficulty in arriving at a solution of this problem.

Mr. Griffiths: Is the Minister aware that where a coroner's court reaches a verdict that death was caused by pneumoconiosis or silicosis after a report by a pathologist, much doubt is created about the decision of the Board? Since it is a judicial authority, whose decision is final and binding, is it not essential

that an inquiry should take place in order to maintain confidence in the Board?

Mr. Peake: My information is that in the majority of the cases where difficulty has arisen the post-mortem examination has been conducted by a general practitioner, and therefore I think it would be wise to see whether the circular issued has any effect before considering further action.

Reciprocal Agreement (B.A.O.R. Service Men)

Mr. Langford-Holt: asked the Minister of Pensions and National Insurance (1) on what dates negotiations with Germany, with a view to concluding a reciprocal agreement to ensure that dependants of Service men living in British Army of the Rhine are not excluded from their rights under the National Insurance Act, 1946. were commenced and concluded;

(2) why a reciprocal agreement with the German Federal Government to ensure that dependants of Service men living in British Army of the Rhine are not excluded from their rights under the National Insurance Act, 1946, has not yet been concluded.

Mr. Peake: Negotiations for an agreement that would include the persons referred to by my hon. Friend have reached an advanced stage and an agreement will, I hope, be signed shortly. There have been a number of complicated matters to settle and I do not think that it would have been possible for us to make quicker progress.

Mr. Langford-Holt: Is my right hon. Friend aware that there is considerable bewilderment and resentment on the part of those serving in Germany when they are told that they are serving on a home station, whilst, at the same time, their dependent relatives, such as mothers, have their pensions stopped on the ground that they are abroad? As this is not a matter which has arisen recently but has been hanging fire for eight years, during which period we have had complete rights in Germany, why has nothing happened hitherto?

Mr. Peake: It is rather a novel situation which has arisen recently with a number of men serving in Germany who have desired to have their elderly relatives living with them. We have already


started negotiations with the German Republic for a reciprocal agreement, and that agreement will be signed shortly.

Mr. Langford-Holt: In view of the unsatisfactory nature of the reply, I beg to give notice that I will raise this matter on the Adjournment on 9th March.

War Pensioners (National Assistance Payments)

Mr. Marlowe: asked the Minister of Pensions and National Insurance whether he is aware that many war-disabled pensioners who draw National Assistance will receive no net increaseas a result of the new scale of pensions, in as much as their assistance benefit will be reduced by an equivalent amount; and whether in the case of disability pensions he will make an exception from the general principle of reducing National Assistance by the amount of an increase in income.

Mr. Peake: No, Sir. All disablement pensioners receiving National Assistance have benefited to the extent of the increase in the assistance rates at least; and up to 20s. of their disability pensions is disregarded in calculating the assistance grant.

Mr. Marlowe: Is my right hon. Friend aware that by the very reason of their disablement many of these men are prevented, as other people are not, from increasing their incomes in any other way.

and is it not unfortunate if, when they appear to get an increase in pension, an equivalent amount is taken away from their National Assistance? Does not the right hon. Gentleman think that in the case of war-disabled pensioners there is a case for departing from the general principle?

Mr. Peake: No, Sir. I cannot agree that that is the case. The 20s. disregard puts these men in a much more favourable position than others who have to apply for National Assistance.

Lieut.-Colonel Lipton: Will not the right hon. Gentleman try to make some sort of distinction between the war disabled people and the others, because the pension payable to the war disabled has nothing at all to do with insurance and it should have nothing at all to do with National Assistance either?

Mr. Peake: The question, of course, has nothing to do with insurance. As I pointed out, these men are already under the existing practice and legislation in a more favourable position than others who have to apply for National Assistance.

BUSINESS OF THE HOUSE

Proceedings on the Northern Ireland Bill and the Fisheries Bill exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[Mr. Buchan-Hepburn.]

Orders of the Day — PUBLIC WORKS LOANS BILL

Order for Second Reading read.

3.31 p.m.

The Financial Secretary to the Treasury (Mr. Henry Brooke): I beg to move, That the Bill be now read a Second time.
This is by no means the first Public Works Loans Bill which has been before the House. From attendance at recent debates and perusal of earlier ones, I am well aware that it is not a subject which normally holds the House enthralled, or inspires to flights of eloquence, but I will try to make my remarks as informative and as illuminating as I can.
The purpose of a Public Works Loans Bill is to make available to the Public Works Loan Commissioners funds which they can lend to the local authorities and to certain other bodies. In 1887, the Local Loans Fund was set up under the National Debt and Local Loans Act of that year. The Local Loans Fund is under the control of the National Debt Commissioners. Section 6 of the 1887 Act empowers the National Debt Commissioners to issue to the Public Works Loan Commissioners:
… such sums as may be for the time being required not exceeding in the aggregate the amount authorised by Parliament.
It is because the existing sum authorised by the last Act is nearing exhaustion that the new Bill is needed. The last Public Works Loans Act received the Royal Assent on 18th December, 1953, and it fixed£500 million as the maximum which might be advanced from that date. This sum of£500 million seems likely to be exhausted by April, and that is the reason why I am today bringing forward the new Bill.
The Bill is on familiar lines. Clause 1 will authorise advances up to a further£500 million from the day when the Bill receives the Royal Assent. I cannot say, nor can anyone else, how long the fresh£500 million will last. It will depend entirely on how rapidly and how heavily local authorities wish to borrow from the Public Works Loan Board. The£500 million authorised by the 1953 Act seems likely to last about 16 months, and that may be a rough guide to the future.
Let me explain at this point that the Bill does not control the amount of borrowing. It is not a policy Bill; it is a machinery Bill. The amount of borrowing by local authorities is controlled not by any of these Acts but by the Government Departments to which local authorities have to apply for loan sanction when they wish to raise loans. The House will also recollect that since 1st January, 1953, local authorities have been free to borrow elsewhere than from the Public Works Loans Board if they so wished.
It may interest the House to know that of the amount borrowed under the 1953 Act up to the beginning of the present month approximately 74 per cent. was borrowed for housing purposes, about 8 per cent. for public health purposes, about 7 per cent. for education, about 5 per cent. for transport purposes, drainage, and so forth, and the remaining 6 per cent. was reborrowing to repay maturing debt. Perhaps I should explain to the House that any balance of the£500 million under the 1953 Act which has not been used up by the date this Bill becomes law will lapse automatically. That also is the existing arrangement.

Mr. Glenvil Hall: It has been normal, as I think the hon. Gentleman probably knows, to give the actual figures and not percentages. If the hon. Gentleman has the figures, I think it would be useful if he could give them to us. We could then compare them with the figures given by former Financial Secretaries to the Treasury when introducing earlier Bills.

Mr. Brooke: I want to help the House as much as I possibly can.
The right hon. Gentleman will probably realise that during the last few weeks borrowings from the Public Works Loan Board have been unusually heavy. The percentage figures that I gave were accurate up to the beginning of February. I will certainly give him the exact figures if he will recognise that they are up to the beginning of February and not up to the present moment. The actual total up to the beginning of February was£364 million, of which£270 million was for housing purposes,£30 million for public health,£24 million for education,£19 million for transport and drainage purposes and so forth, and£21 million for reborrbwing to meet maturing debt.
I can perhaps also assist the House by giving the aggregate figure up to the end of last week. The total rose from£364 million at the beginning of February to£413 million on Friday last, but I am not in a position to give the precise break up of the£49 million borrowed during February.

Mr. Ede: Can the hon. Gentleman divide the education figures into sums advanced to local authorities and sums advanced to the governors or managers of denominational schools?

Mr. Brooke: I cannot give any further break up of the education figure at the moment, but if the House gives me leave to reply to the debate I will try to obtain a further analysis. As I was saying, any balance of the£500 million which has not been used up by the date that the Bill becomes law will automatically lapse. That happens under Section 1 (2) of the 1953 Act and it is repeated by Clause 1 (2) of this Bill.
Under Clause 2 of the Bill we deal, as in previous years, with the necessity for the Public Works Loan Board to enter into commitments to advance money before the advances are actually taken up. Quite clearly, it is essential that the Board should enter into such commitments to make loans before the local authority actually borrows the money. The clear consequence of that is that at any given moment the Board has outstanding substantial commitments which have not yet been taken up. The House may care to note that on 19th February outstanding commitments of that nature were£519 million.
Clause 2 also lays down that at no time during the currency of the Bill, or Act when it becomes an Act, shall the Board's total commitments not yet taken up, plus the Board's total advances under the Bill, exceed£1,000 million. In the 1953 Act the limit was set at£1,200 million. The right hon. Member for Colne Valley (Mr. Glenvil Hall) will be aware that the limit has been altered from time to time. I should like to asure him that there is nothing sinister in the slight reduction of this figure.
It arises because of a new agreement which has recently been made with the local authorities. The agreement is on these lines: first, that loan approvals which have been outstanding more than

two years without being exercised shall be cancelled and, secondly, that local authorities will henceforward not seek the Board's approval for a loan the moment that the authority obtains loan sanction from the Government Department concerned. The local authority will come to the Board for approval for an advance, only if it is altogether likely that the authority will actually be wishing to take up a loan from the Board.
The House will appreciate that in the past there have been occasions, especially since the beginning of 1953, when a local authority has secured an undertaking from the Board to grant it a loan, whereas in the end it has turned out that the loan has been raised from some other source and yet the Board's commitment to make the loan has remained on the Board's books. It is generally agreed by all concerned to be desirable to modify that and to reach the position where the outstanding commitments will be commitments for loans which are likely to be taken up, rather than commitments some of which are dead.
This new agreement will mean that outstanding commitments are likely to shrink to a decidedly smaller figure than in the past. It is judged that the amount provided under Clause 2 can quite reasonably be limited to£1,000 million, instead of£1,200 million as previously, because of this policy agreed with the local authorities of getting rid of commitments which are moribund.
There are just two or three more things I should like to add, having explained the Clauses in the Bill. The first is one in which there will be general interest. My right hon. Friend the Chancellor of the Exchequer said in the House last Thursday that a statement on the rates charged by the Public Works Loan Board would be premature until market adjustments had been completed. The process of adjustment has, in his view, by now gone far enough to indicate that the present rates are now out of line with the general level of Government credit. Accordingly, the Treasury is increasing the long-term rate, that is, the rate for advances from the Public Works Loan Board of more than 15 years duration, from 3¾ per cent. to 4 per cent. Adjustments are also being made to the rates for advances for shorter periods, but the House will probably be aware that the rate of principal interest


to local authorities is the long-term rate, because most of the Board's loans are for periods of longer than fifteen years.

Mr. Douglas Jay: Can the hon. Gentleman say, right away, whether the Government will ensure, by means of the housing subsidy, that this does not result in rising rents for local authority houses?

Mr. Gerald Nabarro: Before my hon. Friend answers that point, will he respond to a further question? If Her Majesty's Government have thought fit to increase the rate from 3¾ per cent. to 4 per cent. on account of the Chancellor's statement last Thursday, will they suitably adjust the rate downwards in the event of the Bank Rate being reduced on a future occasion? If that is the policy of the Government, are we not going to have a series of hiccups or gyrations?

Mr. Brooke: I do not think that we shall have any hiccoughs, or gyrations, but all these matters can be discussed in the course of the ensuing debate and I shall listen with interest to what hon. Members have to say.
In answer to the right hon. Member for Battersea, North (Mr. Jay), the rates of housing subsidy are, of course, a matter for my right hon. Friend the Minister of Housing and Local Government, but I think that I am right in saying that there is provision for periodical re-examination of the rates of subsidy. I cannot speak for him this afternoon. What I am doing at this moment is to announce to the House a decision which has just been made by the Chancellor of the Exchequer and I think, if I may say so, that it would be wise for the House to allow me to complete what I have to say.

Mr. A. Blenkinsop: Perhaps the hon. Gentleman is not aware that the new rate of housing subsidy comes into operation on 1st April, so that it is most important that a statement should be made which would delay the coming into operation of the rate until this matter has been clarified.

Mr. Brooke: If the hon. Member will look at the Order Paper, he will see that there is at least one Question down for my right hon. Friend tomorrow. It is not for me to anticipate what a senior

Minister may say in answer to a Question tomorrow. What I want to tell the House is that these rates will apply to advances made on or after tomorrow, Tuesday, 1st March.
The next point with which I want to deal is one which I know has been discussed at considerable length during previous debates on earlier Acts. It was raised on the last occasion by, among other people, Sir Geoffrey Hutchinson whose absence from debates on this subject we all deplore, because he took a large part in them and was very well informed. It is whether local authorities may be permitted to raise loans from the Public Works Loan Board for periods less than the full period of the loan sanction.
I had the pleasure of meeting representatives of the local authorities about this and other matters last November. In response to my request they sent me further detailed proposals with a letter on 14th January. I know that the local authorities attach great importance to gaining the right to borrow from the Public Works Loan Board for periods less than the full period of the loan sanction. I have considered this desire of theirs very carefully. I want to tell the House that though I have not actually written my reply to the local authorities, I shall shortly be writing to them, in answer to their letter of 14th January, and giving them a favourable answer to the request which they have made—the request which has been pressed in debates on previous Bills of this kind on a number of occasions.
They have made out a case which the Treasury should respect, and I hope that we shall find an arrangement satisfactory to both sides for giving them that greater freedom which they have not possessed hitherto.

Mr. Hugh Gaitskell: Before the hon. Gentleman leaves the question of the rates of interest to be charged to local authorities, will he tell the House what are the new rates for shorter-term loans and how much they have increased.

Mr. Brooke: I think that I can oblige the right hon. Gentleman. I told the House that the new rate for loans for more than fifteen years would be 4 per cent. The new rate for loans for more


than five but not more than fifteen years will be 3¾ per cent. and the rate for loans for not more than five years will be 3⅛ per cent. A Treasury Minute is being made today.

Mr. Nabarro: Will my hon. Friend please tell us the previous rates?

Mr. Brooke: I apologise for having to go through all the figures, but I am extremely anxious that the House should have the full information. The long-term rate is raised from 3¾ per cent. to 4 per cent. The House will be aware that it was reduced from 4 per cent. to 3¾ per cent. in, I think, June of last year. The medium-term rate is increased from 3¼ per cent. to 3¾ per cent., and what I might call the short-term rate, in this sense, is increased from 2¼ per cent. to 3⅛ per cent.
The House will be aware that these rates are so fixed that the Exchequer shall, so far as possible, neither lose nor gain on the operation; that is to say, they are fixed in relation to the current rates of interest on Government securities of a similar character.
I am well aware that there will be a number of questions that hon. and right hon. Members will wish to raise, and I will do my best to satisfy them with any further information which they may desire. All it falls to me to do now, in moving the Motion, is to express my thanks—I hope that they are the thanks of the whole House—to the Public Works Loan Commissioners, who are an unpaid body of people, including the hon. Member for Islington, East (Mr. E. Fletcher). We are grateful to them for their public service, and I think I may say, with some knowledge of the local authority world, that the local authorities themselves have a high regard for the manner in which the Commissioners and their staff discharge their important public duties.

Mr. Nabarro: On a point of order. You will recall, Mr. Speaker, that on 12th November, 1952, when the Public Works Loans Bill came before the House on that occasion, a controversy took place for nearly an hour at the beginning of the proceedings, in which I was privileged to participate, as to whether it would be in order for a general discussion to take place on interest rates that were not mentioned in the Bill before the House—and this Bill today is a replica of the earlier Bill—and also whether it would

be in order for a discussion to take place on the whole of the economic implications of the policy of the Government in altering the level of the Bank Rate from time to time.
As it is already clear that this debate will range very largely around the Chancellor's statement of last Thursday, can you rule at the outset that it will be in order to discuss any of the implications arising from the announcement of a change in the Bank Rate?

Mr. Speaker: I do not think that the Motion for the Second Reading of the Bill can be discussed without some reference, as the Financial Secretary who moved the Motion made it, to the Bank Rate. The hon. Member for Kidderminster (Mr. Nabarro) rather alarms me when he asks whether it will be possible to include a general economic discussion within the scope of the Bill. The answer to that, I think, is "No," but any matters of recent occurrence which affect the operation of the Bill are in order. However, nothing is in order until I have proposed the Question to the House. The Question is, "That the Bill be now read a Second time."

3.57 p.m.

Mr. Glenvil Hall: The Financial Secretary began his speech by indicating that this was a small Measure which, normally, was on a subject which did not excite a great deal of interest. I assure him at the outset that this time there is considerable interest in the Bill. My hon. and right hon. Friends will desire to make observations on some of the matters upon which the hon. Gentleman touched. It is not for me to prophesy how long the debate will take, but I remember, as does the hon. Member for Kidderminster (Mr. Nabarro), the debates on the Bill of last year and the year before. If my recollection is correct, we spent a considerable time on those Measures, small though they were.
On those occasions, the hon. Gentleman's predecessor sat on the Treasury Bench for many hours without being able to obtain any refreshment. As a member of the union for being kind to Financial Secretaries, I assure the hon. Gentleman that if during the debate, supposing it is prolonged, he cares to slip out for a little while, we shall fully understand and shall not raise any objection.
As he said, the simple object of the Bill is to empower the National Debt Commissioners to make provision for the Public Works Loan Commissioners to advance£500 million to local authorities. It also empowers the Public Works Loan Commissioners to enter into commitments to advance another£500 million, if called upon, making altogether in advances and promises£1,000 million. That is£200 million fewer than last year.
We fully understand the reason for the diminution in the amount provided, though we must not forget that there are 1,500 local authorities and, although not all of them now—since Section 1 of the Local Authorities Loans Act, 1945, has lapsed—will have to go to the Public Works Loan Commissioners, undoubtedly the majority of them will still go. From the figures given to us by the hon. Gentleman, it is quite obvious that many of them were well aware of what has been happening in the money market and have seized the opportunity to come to the Board in large numbers during the last few weeks.
The Public Works Loan Board was instituted in 1875, and, therefore, this year it reaches its eightieth birthday, only shortly after the similar anniversary of the Prime Minister. The Board was set up to assist local authorities. Although some people believe that there should be a longer interval between these Bills and that the Government should provide larger amounts to be placed at the disposal of the Board, it is, in my view, an excellent thing that the Government should bring in a Bill once every Session. It gives the House an opportunity to review the work done by the Board and to see whether any changes should be made to bring its practice up-to-date and make it of even greater assistance to local authorities.
There is not the slightest doubt that these facilities are of first-rate importance to the majority of local authorities. I was one of those, with other hon. Members on this side of the House, who resisted the repeal of Section 1 of the 1945 Act. It was our view that it helped to provide an excellent method of helping to finance local authorities. My one criticism of the fact that this Bill comes at this time of the year is that it fails to coincide with the end of the financial year of the Board itself. The Board's year ends, I think, on 31st March each year. Normally, its

report is published within three months thereafter, and we are thus faced with the fact that the figures, when we discuss them, are very much out of date.
This year the figures are almost eleven months out of date, and that is why, when the hon. Gentleman was giving particulars of what had been spent up to the beginning of February, I intervened to ask him to turn his information into figures instead of percentages. Despite the fact that Section 1 of the 1945 Act has lapsed, and that a number of local authorities must have gone to the open market, it is interesting to note that more money has been advanced by the Board this year than last year, and that almost as much has been advanced as was advanced in 1952.
In November, 1952, the then Financial Secretary to the Treasury told us that£274 million had been advanced to local authorities for housing purposes. Last year, the figure was only£245 million, and this year it has gone up again to£270 million. If I understood the hon. Gentleman aright, the amounts for outstanding commitments, which have been astonishingly large these last few weeks, brings the aggregate up to a great deal more. I should like to know whether this increase is due to fears about a rise in the rate of interest which the Board charges, or whether there is some other reason. Perhaps we may be informed on that matter.
Looking at the last Report which ended in March last year, I noticed that the Commissioners say that no fewer than£97 million was asked for, apparently approved by the Board, and then not taken up. May we be told what is the figure for the last eleven months? I assume, from what the hon. Gentleman said, that the figure will not be anything like that amount, because of recent applications due to the change in the Bank Rate. But we should like to know, because it would be of interest to the House to discover why it is that some local authorities apply for money, get approval from the Government Department and from the Board, and then, to an amount such as this, decide that they will not go on with the application.
Is it that in the meantime they find that they can get better rates in the open market, or what is the reason? I think that the House would like to know. These


queries are pertinent, because the Board exists to assist local authorities to raise money on the best terms. Other things being equal, the facilities provided by the Board should be equal to, even better than, those obtainable in the open market. One of the prime functions of a debate of this kind is to discover whether, as the years go by, the rules by which the Board functions are elastic enough to meet modern conditions.
For a number of years hon. Members have criticised the fees which the Board has thought fit to charge. The hon. Gentleman made no reference to them. What is the fee now charged? Is it still 4s. per cent., with certain variations for loans secured on certain classes of property, or has it been altered? I see from the last Report that fees received amounted to£657,472. That was a considerable drop on what was received the year before, when£874,277 was received. If my memory serves me right, in the year before that the amount received was£800,000 or more.
If the costs to the Board were almost as high, one could appreciate figures of this sort, but we know that the costs of the Board are very much less. According to the last Report, the expenses, salaries, rent, stationery, postages, superannuation and other items amounted to no more than about£79,000. There was thus over£500,000 clear profit to the Department. To some of us it appears quite unfair that local authorities should be charged these sums, for such fees seem to be out of all proportion to the cost of the services rendered. I should like the hon. Gentleman to tell us whether this aspect of the matter has been considered. It has been raised often enough, but so far as I know, nothing has been done.

Lieut.-Colonel Marcus Lipton: Would my right hon. Friend agree that the work of the Public Works Loan Board could be done just as well by the Treasury? It would seem that the Board is a "fifth wheel" to the conveyance.

Mr. Glenvil Hall: I do not wish to go into that now. The work has to be done by someone, and it could be argued that if the Treasury did it additional staff would be needed. I do not know what the staff now numbers, but I gather that the figure is going down. I should be surprised if it is more than 80. Probably it

is somewhere between 70 and 80, but certainly not more. There is a considerable amount of work, and I should imagine—though it will be for the Minister to say—that even were it done inside the Treasury, it would have to be done by the staff similar to those employed in the present Department.
We on this side of the House were delighted that an arrangement has been reached to permit local authorities to borrow for periods less than 60 years. I am sorry that that arrangement has not gone further and allowed local authorities who have borrowed at rather high rates to borrow at cheaper rates, when a rate change occurs, by repaying the loan and refloating what is left of it.
I am, therefore, sorry that that suggestion has not been agreed to. The authorities have to find this money either from those who live in council houses or from the ratepayers generally in their areas. Why should they pay more interest on borrowed money than they need? If they borrow in the open market they are free to make this change, and as the Board exists to assist local authorities, it seems to me that it should be able to assist them in the same way, whenever possible.
I know that there are difficulties. For example, the Exchequer grant is made year by year on certain percentages, but we have to remember that money borrowed for housing purposes is not subject to that grant. It attracts a subsidy, and it therefore seems to us that something should be done in this direction.
May I say a word or two on interest rates? I have not the slightest doubt that my right hon. and hon. Friends will come back to this subject over and over again during this debate. There is a vast change in the conditions today compared with those when my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) was Chancellor of the Exchequer. My right hon. Friend held the interest rate steady throughout. For a number of years the rate was held steady at 2½per cent. A little later my right hon. Friend the late Sir Stafford Cripps advanced the rate to 3 per cent., but he never went above that. Since the present Government came into power, the rate has fluctuated. I forget how many times it has changed—certainly three times in their period of office. When the hon. Member for Kidderminster (Mr. Nabarro) used the word "kick-up"——

Mr. Nabarro: We must get this right. What I said was "hiccups and gyrations."

Mr. Hall: Whether it is kick-up or hiccup, it is a most elegant expression, as all hon. Members will agree. Just what it means in this connection I do not know, but certainly there was no hiccup or kick-up while my right hon. Friend the Member for Bishop Auckland or the late Sir Stafford Cripps were at the Treasury. They bore in mind that local authorities should be encouraged to borrow money as cheaply as possible, both for their housing purposes and for other public works, and that industrialists and commercial men generally should also be able to borrow money as cheaply as possible.
Since the present Government came into power, as I have said the rates have fluctuated. This has been very unfair on many local authorities, they have not known what the rate would be almost from month to month. Now, as the Financial Secretary indicated, the rate is to go up again. I do not know how long it will remain at 4 per cent. It is not quite as high as it was in October, 1953, when I think it was 4½per cent., following a change in the Bank Rate. Be that as it may, there is no doubt of its impact on local authorities' finances.
I want to put a further point to the Financial Secretary. It is obvious from the last Report that the Board appears to be carrying a rather large sum in bad debts, and I notice that no provision has been made in the Bill for writing off any fresh amounts. It think the last time any considerable sum was written off was two or three years ago—I think in the 1952 Act—when we wrote off£171,000. Does this mean that bad debts are not accumulating or is it that the Government have decided not to ask the House to relieve the Local Loans Fund of any of the outstanding arrears or does it mean to ask the House to write off such money only at longer intervals? At any rate, even if we are not asked this time to write off sums which, obviously, will never be recovered, it is I think, the Financial Secretary's duty to let us know what the position is.
We on this side of the House welcome the Bill, and believe that the amounts of money which it provides will be of the utmost benefit to local authorities. We do not intend to vote against the Second

Reading, but we believe that there are a number of outstanding questions to which a reply should be given. I therefore hope that before we give the Bill a Second Reading the Financial Secretary will be able to assure us that the rate of interest which has now been announced will not be imposed for any longer than is absolutely necessary and that its impact on local authorities will be such that, through the subsidy, they will be able to meet the increased charges.
As we all know, local rates are now extremely high and any change in the Bank Rate, and the interest rates to local authorities which follows, means to local ratepayers an increase in the amounts which they have to find each year. In particular, it means an increase of some shillings a week in the rents which local authorities have to charge to their tenants.
We should, therefore, be careful at all times to see that what local authorities have to find in interest charges is kept as low as possible. The Board was set up to assist local authorities to keep these charges down and, in so far as it does that, it fulfills its functions, but in so far as it is used by the Government as an instrument for keeping up rates of interest and imposing upon authorities charges which otherwise they might not have to meet, it is bad. We on this side, as I say, do not intend to oppose the Second Reading, but I do ask the Financial Secretary to give the House the information that will be asked for.

4.8 p.m.

Sir William Darling: My hon. Friend the Financial Secretary almost outdoes the right hon. Member for Colne Valley (Mr. Glenvil Hall) in persuasiveness and soothing words, but the House must be quite clear about what we are doing this afternoon; we are once again raising the cost of living.
The right hon. Member for Colne Valley sought to persuade the House that it is desirable to get further into debt, but the monstrous debt under which this country staggers is a crying scandal against which very few voices are raised in this Chamber. Although my right hon. Friend is borrowing less for the Public Works Loan Board this time than has been borrowed on previous occasions, nevertheless this is not a policy which should necessarily be continued.
The Public Works Loan Board came into being because of the impecuniosity and lack of resources of local government way back at the beginning of the century or earlier—1887, I think. Local authorities in those days were often imperfect organisations. They had no developed rating system—there was little to rate—and there was little experience of the art of government through the rates. Consequently, there was set up a special organisation to assist local authorities to provide money for necessary public works, mostly sewerage and roads in those days.
In those days there was the need for a Public Works Loan Board, but I do not think there is a need for its continuation, and certainly not for the motive for which it is used at the present time, of encouraging profligate local authorities to borrow money they could not borrow otherwise. I specifically use the word "profligate."

Mr. Charles Pannell: Why does the hon. Gentleman say "profligate" local authorities, bearing in mind that most of this money can be borrowed only with the consent of the Government? The local authorities cannot themselves go straight to the Board. They have to get the sanction of the Government through the Chancellor. It is a long time since the hon. Gentleman was made honorary treasurer of the City of Edinburgh, but if he remembers those days he will know that I am right.

Sir W. Darling: That interruption, of course, is characteristic and very interesting. It reflects the difference in the view of hon. Members opposite and that at least of myself on this side.
I repeat that this device of having a Public Works Loan Board has been an encouragement to many profligate local authorities. By profligate local authorities, I mean local authorities which are tempted and encouraged to do things which perhaps they would not do, and the central Government are often mainly to blame in this matter.
Central Governments of different complexions from the present one, as well as the present one, have often tempted local authorities to do things which, in my judgment, and certainly in the opinion of the ratepayers, might as well not have been done, and the Board has encouraged

them in this direction. One would think the only way in which a powerful local authority, or, indeed any local authority, can raise its necessary income is by loans. It has, of course, been the established practice and habit of this country for many generations to do so, but it is neither wise nor necessary.
There is the city to which the hon. Member for Leeds, West (Mr. Pannell) has referred, the City of Edinburgh, which has a remarkable record in this sphere. It is true that I was one of the city's treasurers for three years. For sixteen years the rates of the City of Edinburgh stood at 7s. 11d. Through wars and rumours of wars and uncertainties of all sorts, and problems and difficulties which brought down Governments and, indeed, changed many great States, this city has managed, by a prudent management of her affairs, to dispense with the Public Works Loan Board and to conduct her business at 7s. 11d. in the£. This is not fiction but fact, and when I say that some local authorities are profligate I am saying what I know to be true.
The City of Edinburgh today, for example, does not need to go to the Public Works Loan Board, but borrows from its own citizens. I happen to be connected with a company which has£200,000 in the bank, and which lends it to the City of Edinburgh at, I think, 1½ per cent. How is it able to do that? It is able to do so because the confidence of the ratepayers of the City of Edinburgh is in their local government, which is unhesitatingly able to borrow at half the rate which either the market or the Board can charge for money.
I am not saying that everything is perfect. This may be possible in Edinburgh, but not elsewhere; and I am not suggesting that the financial integrity of the people of Edinburgh is superior to that of the honourable Cockneys who represent the City of Leeds. It may be due to a difference in the financial structure——

Mr. Pannell: The hon. Member is a parochial-minded person, and he speaks only from his nodding acquaintance, as it is now, with the City of Edinburgh. I speak as an Essex-born, Kentish-domiciled, near-Cockney representing a Yorkshire city. Lending at from 1⅘ to 1½ per cent. is not peculiar to Edinburgh.


It is done by any number of small towns. I suppose Leeds did it first and Edinburgh later.

Sir W. Darling: I did not think that on this occasion, any more than on any other occasion, I was going to make a very good speech, but the stimulus that I am giving to the hon. Member for Leeds, West encourages me to believe that I am saying something worth while. He is anxious to charge me with having a parochial mind. There is a proverb in Holy Writ:
The eyes of the fool are on the ends of the earth.
Although Leeds is not at the ends of the earth, from Dartford it is some distance, and the hon. Member for Leeds, West can take the point of that proverb to himself. If I am parochial-minded I am not ashamed to be.
Good government begins in little towns, and good government today is probably in the small communities and not in the large ones. Although we are going to pass this Bill, and this payment of£500 million, let us be quite clear that we shall add to the burden and the debt of the next generation. We are making things more difficult both for the present and for the future. To save is a virtue. To live within one's means, whether as a person or a community, is a virtue. I do not think this continuing milking of the future, the unimaginable future, for the needs of the present is wise. I do not think that this is good personal or public finance.
Although my voice is a parochial one, and will doubtless receive little support, it is none the less true that to get into debt is to get into trouble, and that this policy places burdens on others which we do not intend to discharge ourselves. This is a burden encouraged under this Administration as well as their predecessors. I repeat that those local authorities that manage their business prudently and well can live within their means.
When prudence is engendered, local authorities will not be tempted by the Crown or by the central Government to do this, that and the other. They will say with civic pride, "Until we can afford to do these things ourselves, we will dispense with them." That is not the practice of the London County Council,

probably one of the most extravagant and profligate local authorities in this country. None the less, many local authorities have taken this view and hope to continue to do so.
I should like to join issue with the right hon. Gentleman for Colne Valley in his protests against these rates of interest. I have never believed that money was dear at any price. To save£100 is not an easy task. I think that all of us in this House have managed to save it with difficulty. To give it to somebody in exchange for£5 a year seems to be the cheapest way in which one can spend one's money. Money, in my opinion, is never dear, not even at 6 or 6½ per cent. which is the current rate of interest in Scotland today for the use of£100, which possibly is never repaid. Strangely enough, money is the cheapest thing in the community. Nothing else is sold at a gross profit of 6½ per cent.

Dr. H. Morgan: Oh, yes.

Sir W. Darling: No other commodity is that I know of.
When I hear the observations of the right hon. Gentleman about the high price of money, I beg him to reflect on the consequences. If money is dear, people tend to be more prudent. If money is cheap, they tend to be profligate. There is something to be said for a dear money policy. It makes people careful not only with what they themselves borrow, but with what they are prepared to lend. The social effects of a dear money policy are restrictive, it is true, but they are honestly restrictive. They do not induce men and women into a fool's paradise.
It is cheap money which leads them into temptation, so I hope, that as debt is not a good thing, as to live within one's means is a wise thing, and as public extravagance and public profligacy are merely one and the same thing, they will be discontinued.

4.30 p.m.

Mr. Eric Fletcher: The Financial Secretary has reminded the House that I am a member of the Public Works Loan Board. I hope hon. Members will not think that I am thereby disentitled to say a few words on the Bill, any more than on previous occasions. The Financial Secretary was also kind enough to pay a tribute to the work done


by the Commissioners. I ought to acknowledge that by replying that most of the hard work is done by the excellent and industrious staff who serve the Commissioners so painstakingly year in and year out.
One of the agreeable features of our debates on Public Works Loan Bills is that the work of the Department is rarely, if ever, criticised. Such controversy as arises is almost entirely focussed on the policy of the Government, in the way they treat the Public Works Loan Board by extending or restricting its activities, or in relation to the rate of interest that it may charge. It is just as well, in view of the criticisms that are sometimes made by local authorities and others about the Board, that it should be clearly understood that it is the Government and not the Board who fix and vary from time to time the rate of interest charged to local authorities by the Board.

Lieut.-Colonel Lipton: How often does the Board meet? Does it just do what the Government tell it to do?

Mr. Fletcher: The Board meets every fortnight. The opinion has been expressed before that the Public Works Loan Board serve no useful purpose in our administrative arrangements. In the past, I have expressed the opinion myself that it is little more than a facade. That was in the days when local authorities had no alternative source of borrowing. During the last year or two, local authorities have been able to borrow not only from the Board but from the market, and from the other source which is also open to them, the private investor. Some local authorities make a point of obtaining their money from private investors.
If I were asked my opinion today, it would be that my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton) is not justified, nor is the hon. Member for Edinburgh, South (Sir W. Darling), in saying that the Public Works Loan Board ought to be abolished or that its work could be done by a purely administrative body. It serves a useful function, in so far as it is able now to withhold sanction if, in the view of the Commissioners, that course is justified.
The need to do so rarely arises, because in most cases the purposes for which the local authority wishes to borrow are deserving and meritorious, serving good

social ends in the locality, something which it is the duty of the Board to encourage. There may be, and there have been, cases when a project was unnecessarily expensive, or for some other reason, in which the Board has withheld or deferred sanction until some objectionable feature of a local authority project was removed.

Sir W. Darling: I did not say or intend to say that I favoured the abolition of the Board. It fulfils a useful place in our administrative system. I share the views of the hon. Member who is addressing the House.

Mr. Fletcher: I am glad to be able to acquit the hon. Member for Edinburgh, South in that respect.
As on previous occasions, the real value of the debate is that it enables us to criticise the policy of the Government with regard to the rate of interest which the Board is obliged to charge. It is significant that the Financial Secretary has had to announce today an increase in the rate. As my right hon. Friend said, there have been four more changes in the rate of interest than under the Labour Government. This is the fifth change that has taken place since the Conservative Government assumed office in October, 1951.
These changes produce very serious consequences for local authorities. The ideal situation for them would be stability in the rate of interest over a long period. Continuing fluctuations in the rate are embarrassing to local authorities and not only produce a great deal of hardship, injustice and uncertainty, but cause inequality in regard to the rates charged between one local authority and another.
The Financial Secretary gave very interesting and revealing statistics. He said that during the period to the end of January, when the existing Act had been current for about thirteen months, the total borrowings from the Board amounted to£364 million. He told us that the total had gone up to£413 million. I took down the figures which he gave. They showed an additional£49 million in the last month. Whereas the monthly average a month ago was in the region of£30 million, it has gone up during the last four weeks to£49 million.

Mr. Nabarro: Surely that is very perspicacious on the part of local authorities. Why should the hon. Member deprecate their action in that respect?

Mr. Fletcher: I have not got to the point of deprecating it or otherwise. I am at the previous stage. I am pointing out that as a result of the increase in the Bank Rate which took place a month ago, and of the general expectation that it would be followed by a further increase in the Bank Rate, as indeed it was last Thursday, a rush has been precipitated on the part of local authorities to obtain advances from the Board before the rate of interest went up.
I am not saying that it is wrong. It is a consequence of the change in the Bank Rate. If the rate of interest had not been announced today I have no doubt that the amount of loans that the Public Works Loan Board would have had to make in the next few weeks would have been at a very much higher rate than£50 million a month. It would almost certainly have been about£20 million a week, because local authorities would have been most anxious to get their advances before the change in the rate took place. Now that the change has been announced, all those local authorities which have not already received their advances will have to pay the increased rate of interest. That produces a great deal of inequality between one local authority and another.
If hon. Members will look at the last Report of the Public Works Loan Board, they will see that in page 9 figures are given showing the various rates of interest at which local authorities have, in fact, borrowed during the last ten years. The rates have fluctuated from 1¼ per cent.—though only a very small amount was borrowed at that rate—to 4¼per cent. By far the largest amount of the money lent by the Board to local authorities during the last ten years—in fact, it is a figure of over£1,100 million—was at the rate of 3 per cent.
An increase of even a quarter per cent. on even a small loan produces very considerable results, and, when it is borne in mind that at the moment there are pending loans running into millions of pounds, hon. Members will appreciate the consequences which that increase will have on the ratepayers in the areas of the local authorities concerned.

Sir W. Darling: They need not borrow.

Mr. Fletcher: The hon. Member for Edinburgh, South says that they need not

borrow, but if they are to carry out their housing and other plans to which they are committed they must borrow.
For example, if£1,000 is borrowed from the Board at the old rate of 3¾ per cent., the total amount which the local authority has to repay is£2,521 by half-yearly repayments of£21 0s. 3d. The result of this increase in the rate to 4 per cent. means that the total amount which has to be repaid on£1,000 goes up by£125 to£2,646 and the half-yearly repayments go up by over£1 to£22 1s. 4d.
I do not know whether we are to have a review of the housing subsidies as the result of the new rate of interest or not, but, as my right hon. Friend the Member for Colne Valley (Mr. Glenvil Hall) pointed out, the recently announced reductions in the subsidies are to operate only from 1st April, and unless these subsidies are revised and unless the Government grant increased housing subsidies, the inevitable result of the rate of interest announced by the Financial Secretary today will be that all tenants of houses built as a result of loans made after today will have to pay another 2s. or 2s. 6d. per week in rent.
There may be local authorities which can average that out, but there are some, particularly in the rural areas, which will have no opportunity of doing so, and that is bound to mean a net increase in the rents payable by tenants in those areas.
The real criticism that can be made against the increased rate announced today is that, whereas it may or may not be a good thing in the interests of the national economy that there should be changes of Bank Rate—and I am not arguing whether that is a proper instrument which the Chancellor should use in the interests of the national economy to correct the tendencies which have manifested themselves during recent months—the inevitable result of using the instrument of the Bank Rate, rather than import restrictions or any method for one set of purposes and circumstances, is to produce quite unnecessary chaos and hardship in local authority finance.
That is a most regrettable consequence which flows from the Chancellor's announcement last Thursday, and I had hoped that the Government would have seen the necessity of finding a method which enables local authorities to balance


their finances without this continuous uncertainty and fluctuations of the rate of interest in local loans.
Further, I want to ask the Financial Secretary what effect the increased Bank Rate and the increased rate of interest to be charged to local authorities are to have on all the ambitious plans that have been announced so recently. Millions of pounds are to be spent on railways, hospitals and roads, and a great deal of the expenditure on highways which was announced recently will fall on the local authorities and increase their costs.
Is it to be a consequence of this new financial policy that these ambitious schemes are to be curtailed, or will they be postponed? How much of the additional cost will fall on the local authorities? Where is the end of all this? Are we to have a revised statement as a result of the changed financial policy which the Chancellor announced on Thursday, and which the Financial Secretary has followed up in his announcement today?
These are the questions to which I hope we shall receive answers before this debate ends, because while, as I have said, there is no direct conflict on the merits of the Bill, this occasion is always used to probe the policy of the Government in these wider matters of national finance.

4.47 p.m.

Mr. Gerald Nabarro: We had a very interesting and instructive debate on the Second Reading of the Public Works Loans Bill on 12th November, 1952, when, once again, practically the whole of the controversy that took place centred upon the rate of interest to be charged by the Board. The Bank Rate at that time was already substantially higher than the rate appertaining when the present Conservative Government came into office.
On that occasion, I defended the increased rate of interest for loans made to local authorities by the Public Works Loans Board for three principal reasons, and I think it is pertinent to look back on what has happened in the intervening period since November, 1952, in order to see whether, in fact, any of those predictions have come to pass. I said then:
I welcome this Bill for three reasons. It is a measure of freedom, a measure of financial discipline and a measure of economy."—[Official Report, 12th November, 1952; Vol. 507, c. 1042.]

The main consideration today is the measure, of financial discipline. I have never understood why local authorities should expect to be able to borrow from any central Government agency or elsewhere at artificially low rates. In my opinion, they should be required to pay the appropriate interest rates which supply and demand in the open, free money market at that moment demands that they should pay.
At this moment, the rate announced by my hon. Friend the Financial Secretary may or may not be appropriate. My hon. Friend has been extremely arbitrary in stipulating in his speech what these rates shall be, and I shall pass to the question of the rates in a moment.
As my hon. Friend the Member for Edinburgh, South (Sir W. Darling) so rightly said, the important thing is that local authorities, like all other institutions, business houses, industrial undertakings and the rest, should be discouraged from profligacy and extravagance by the operations of a free money market and the fact that the interest rates at which they borrow are appropriate to the demand and supply position of money on an open and free market at the particular moment when the borrowing transaction takes place.

Mr. Roy Jenkins: The hon. Member has twice referred to this free money market, with the rate of interest determined by the supply of and demand for money. I cannot quite follow him. Surely the rate of interest is largely determined by the Government's decision about the Bank Rate, which has nothing to do with either the supply of or demand for money upon the free market?

Mr. Nabarro: The hon. Member has not been in his place throughout the debate. Had he been here he would have observed that several references have been made to the fact that many of the bigger local authorities have had recourse direct to the money market during the period which has elapsed since 1952.

Mr. Jenkins: Mr. Jenkins indicated dissent.

Mr. Nabarro: The hon. Member shakes his head, but, of course, many of them have had recourse direct to the money market. He should know, because he sits


for the constituency of Stechford, which is in the City of Birmingham. The City of Birmingham was one of the first local authorities to go direct to the money market, so dispensing with the facilities offered by the Public Works Loans Board. That was provided for by the terms of the Act of 1953. Not all local authorities go direct to the money market. The important point is that the operations of the market should be upon a free and unrestricted basis, though from time to time, if the Chancellor announces a change in the Bank Rate, it might have an effect upon the rates of interest that may be charged.
I mentioned a few moments ago that I should criticise what my hon. Friend said about fixed interest rates. He said that the Loan Board proposed to increase its rate of interest to local authorities for long-term loans from 3¾ per cent. to 4 per cent.; for medium-term loans from 3¼ per cent. to 3¾ percent., and for short-term loans from 2¼ per cent. to 3⅛per cent. As a matter of general principle I dislike what I referred to in an earlier intervention as the hiccoughs and gyrations of a system of this kind, namely, the alteration of the rates every time the Bank Rate changes.
I should like to quote a case which, in my opinion, is exactly analogous, namely, building societies and their rates of interest upon mortgages. It is instructive that Sir Harold Bellman, Chairman of the Abbey National Building Society, said last Friday that he hoped that it would be possible to continue the mortgage rates at their then level without alteration on account of the changes in the Bank Rate. If the larger building societies can do so, why cannot Her Majesty's Government arrange a stable rate of interest for the Loan Board in respect of its loans to local authorities? If that rate is considered to be too high, the local authority concerned can always have recourse to the free money market. That point is evidently right over the head of the hon. Member for Stechford.
My policy—so admirably supported through the years by my hon. Friend the Member for Edinburgh, South—has always been to encourage every local authority, as far as is humanly practicable, to go direct to the money market.

Mr. Ede: The hon. Member for Edinburgh, South (Sir W. Darling) was advocating that local authorities should not borrow at all.

Mr. Scholefield Allen: Is not the reason for the announcement made last Friday—to which the hon. Member for Kidderminster (Mr. Nabarro) has just referred—the fact that building societies are already charging a rate which is far higher than the Bank Rate?

Mr. Nabarro: It would be most inappropriate to go into the terms and conditions upon which building societies may lend or borrow, but suffice to say they are both borrowing and lending money today, upon extremely competitive terms. The precise terms from week to week, and month to month, are controlled and dominated by the forces of supply and demand on a free money market. My policy, supported by my hon. Friend the Member for Edinburgh, South—and I am proud to be associated with his free enterprise ventures—has always been to encourage the maximum number of local authorities to have recourse to the money market instead of to the Public Works Loan Board. The right hon. Member for Colne Valley (Mr. Glenvil Hall) evidently fails to appreciate that local authorities are thereby generally able to borrow upon more advantageous terms than they would receive from the Board.

Mr. Glenvil Hail: If that is so, why has there been such an enormous increase in the past month or so in the number of applications made to the Public Works Loan Commissioners—as the Financial Secretary has pointed out?

Mr. Nabarro: I must recommend the right hon. Gentleman to read the "Financial Times" from time to time. He will learn something about the operations of a free stock market if he reads the "Financial Times" and studies its features and those of similar financial publications.

Lieut.-Colonel Lipton: He would have lost a lot of money if he had done so.

Mr. Nabarro: That depends upon what sort of an investor he is, and upon the perspicacity he displays. I commend for their perspicacity those local authorities which borrowed from the Public Works Loan Board before the Bank Rate went


up. They took advantage of the situation and have thereby benefited from it.
The first question I want to ask the Financial Secretary is: is it to be the policy of Her Majesty's Government to alter, every few weeks or every few months, the terms and rates of interest upon which the Board may lend to local authorities? Are the rates of interest always to be pegged to the Bank Rate? Why cannot the Board behave as the building societies intend to behave, and keep in operation a stable rate of interest to apply to its business transactions? A great deal of difficulty will be caused if we allow fluctuations in the Bank Rate in the way we have during the last year or so. We shall cause a great deal of difficulty to local authorities if we insist that the rates of interest of the Board are so closely associated with the Bank Rate. It should be possible to arrive at an average rate of interest for the Board for a guaranteed period of years. If local authorities do not wish to borrow at that rate, let them go to the open money market and borrow upon more preferential terms, if they are able to do so.
My second point relates to the course of local authority borrowing since the Act of 1953 became operative. The most important part of our debates during the Second Reading of that Public Works Loans Bill, on 12th November, 1952, centred around the question whether or not it was desirable that the bigger local authorities should have recourse direct to the money market. Since then, many local authorities have borrowed large sums of money upon the open market. I should like my hon. Friend to tell us how much money has been borrowed in that way in each of the last two years, and how it compares with the moneys which have been borrowed by similar local authorities from the Board during an equivalent period, before the dispensation was given for direct recourse to the money market.
In the Second Reading debate to which I have referred, several of my hon. Friends made the point that every pound borrowed by a large local authority direct from the money market relieved the Chancellor of the Exchequer's Budget of the necessity for providing a below-the-line surplus in an equivalent amount. It was, therefore, an aid and incentive to the reduction of taxation, and very desirable. That point was argued extensively

during that debate, although hon. Members opposite profoundly disagreed with the sentiments expressed by my hon. Friends and myself, in this connection.
I want to know from my hon. Friend the Financial Secretary—as this is the first opportunity we have had of asking him this question—to what extent the bigger local authorities have had recourse direct to the money market, how much money in total has been borrowed by them and by how much has the Public Works Loan Board been relieved by this means?
We generally accept the principles of this Bill. It is a necessary hardy annual or biennial. Subject to a satisfactory answer on only those two questions, I shall, of course, support the Second Reading.

Mr. Pannell: Does the hon. Member realise that it is doubtful whether the Financial Secretary can give that answer, because so much of the money would be borrowed on short-term account and there would be no record at all? I am speaking from practical experience and not trying to be awkward.

Mr. Nabarro: As the hon. Member said, there is a certain amount of local and short-term borrowing by the bigger local authorities, but 99 per cent. of the borrowing of the bigger authorities who have sought recourse to the open market have done so by flotation of long-term loans. [An hon. Member: "Dead wrong."]. In answer to the second point put by the hon. Member for Leeds, West, he was one of the only Socialist hon. Members who welcomed the dispensation given to local authorities to have recourse to the money markets——

Mr. Panned: I was the only one.

Mr. Nabarro: The hon. Member for Leeds, West, was the only one—the only one who expressed himself. I quote from the Official Report for 12th November, 1952, the hon. Member speaking:
I will not hide the fact that this Bill will be generally welcomed by the local authorities—

Mr. Nabarro: Hear, hear; honesty itself."—[Official Report: 12th November, 1952; Vol. 507, c. 1037.]

5.3 p.m.

Mr. Roy Jenkins: Throughout his speech this afternoon the hon. Member for Kidderminster


(Mr. Nabarro) has been in a very rumbustious mood. He needed to be in order to try to cover over some of the obvious fallacies in his speech. At the same time I was rather disappointed by the way in which he dealt with some of the points he made.
He started by telling us that when a Bill similar to this was debated in 1952 he made three predictions about it, welcoming it. I am not sure whether he said they were "predictions" or ways in which he welcomed it but he first used the word "predictions." Those predictions were that it would be a measure of freedom, of financial discipline and of economy——

Mr. Nabarro: Three reasons.

Mr. Jenkins: The hon. Member said that he would then proceed to tell us how things had worked out to prove how right he had been.
The whole speech struck me as a self-important contribution; none the less, we were looking forward with interest to see how these three concepts, or three reasons for welcoming the Bill, had worked out. From his point of view they had a certain advantage in that all three were almost completely meaningless in the context in which he used them. Therefore, there would not be much difficulty in justifying what had happened. But the hon. Member did not even do that. Either he got tired of the subject, or was put off by interruptions and thought of something more important to say, but he did not tell us how the three concepts had been demonstrated in the past few months.

Mr. Nabarro: It is true that I gave three reasons for welcoming the Bill in 1952. I repeated them this afternoon. I then went straight on to say that the Bill before the House exemplified that my prediction was correct in regard to one of the reasons, which was financial discipline. I then expounded at considerable length the reasons why financial discipline is so important today in recourse to the open and free money market.

Mr. Jenkins: I can quite see that, in the view of some hon. Members, we needed financial discipline 2½ years ago, and, after 2½ years of the Chancellor's policy, we still need it. If that is what the hon. Member intended to convey to the House——

Mr. Nabarro: Always.

Mr. Jenkins: The hon. Member says, "always," but I understood from the whole burden of his argument that he thinks we need different degrees of discipline at different times.
He is greatly attracted—although he does not fully understand it—to the concept of a free money market in which rates move up or down according to the supply and demand for money available. He was very anxious, in the course of his speech, to strike a close alliance with his hon. Friend the Member for Edinburgh, South (Sir W. Darling). I thought that, on the showing of the hon. Member this afternoon, he was an ally whom it was unwise for anyone to seek.

Mr. Nabarro: Which hon. Member?

Mr. Jenkins: The hon. Member for Edinburgh, South.
The hon. Member for Kidderminster was unwise to seek him as an ally this afternoon. Of course, on all afternoons it would be unwise to seek the hon. Member for Kidderminster as an ally. That, I think, is the difference between the two hon. Members.
As I understood the burden of the argument of the hon. Member for Edinburgh, South, it was that borrowing was always a bad and an unwise thing.

Sir W. Darling: Hear, hear.

Mr. Jenkins: At the same time the hon. Member suggested that the best way one could spend one's money at present was by borrowing at 6½ per cent. because that was the cheapest deal which was available, and that Scottish banks, of which we know the hon. Member is a distinguished ornament, were performing a service to the country.

Sir W. Darling: I did indicate that while the foolish, unwise and profligate may borrow at 6½ per cent., the City of Edinburgh can borrow at 1¼ per cent.

Mr. Jenkins: I certainly remember that in one part of his speech the hon. Member referred to the fact that the City of Edinburgh was borrowing money on call at seven days. I understood that it was 1½ per cent. Apparently it has gone down to 1¼ per cent. in the last hour.

Mr. Pannell: The hon. Member for Edinburgh, South also referred to


profligate local authorities. I went out of the Chamber and checked the outstanding loan debt of the City of Edinburgh and found it was£26 million.

Sir W. Darling: What is the rateable value?

Mr. Pannell: The hon. Member will take this from me. I also have a return of the rates of interest at which British cities throughout the country are borrowing. Taking population and other things into account, and allowing for ordinary Scottish meanness, it works out very much the same.

Mr. Jenkins: My hon. Friend the Member for Leeds, West (Mr. Pannell)—as always—has made a very powerful and interesting observation. I am not absolutely sure why he has chosen my speech in which to make it.

Mr. Pannell: I got in as; soon as I could.

Mr. Jenkins: If I may go on with my speech from there, for the moment leaving the hon. Member for Edinburgh, South, and coming back to his ally the hon. Member for Kidderminster, one of the other more extraordinary theses which that hon. Member put to the House was that he took the view that the more local authorities could be sent away from the Public Works Loan Board and to the money market the better that would be. As I understood it, the better it would be in the interests of economy, of financial discipline, and in the interests of getting away from the profligacy on the part of local authorities which the hon. Member for Edinburgh, South deplores so much.
The hon. Member for Kidderminster went on to advocate a policy by which the rates of interest on the open market would no doubt vary as they do at present according, as he thinks, to changes in the supply and demand for money—a rather outmoded concept—and not according, as most other people think, to a great many other influences, including the rigging of the market by the Government from time to time. We were to have fluctuations from day to day, from week to week, and month to month, but loans from the Public Works Loan Board should be averaged out over a period and one should not have those fluctuations in loans from the Board.
At a period when the Government think, rightly or wrongly, that there is need for some financial stringency, the Public Works Loan Board would be offering a very much lower rate of interest than the open market, and no local authority in its right mind would think of going to the open market in those circumstances. Therefore, it is not at all clear how the one concrete, intelligible suggestion to emerge from the speech of the hon. Member would in any way conduce to the aims which he and his hon. Friend the Member for Edinburgh, South, apparently, have in view. It would merely mean that at a time when we are told that there is profligacy—I am doubtful whether it exists—and at a time when it is most necessary in the view of the Government to curb it, local authorities would be penalised against any checks upon it.

Sir W. Darling: My view was—and I am sure that the hon. Member will agree with me—that the more moneylenders there are available to the borrower, the better opportunity there is for the rate to come down. Remember that the local authorities always have the supreme advantage that they need not borrow at all: they can afford to wait.

Mr. Jenkins: That is the interesting view of the hon. Member for Edinburgh, South, but it was not on this point the view of the hon. Member for Kidderminster.

Mr. Nabarro: The hon. Member must not ascribe to me the sole responsibility for a desire for a certain stability of interest rate on the Public Works Loan Board lending to local authorities. The right hon. Member for Colne Valley (Mr. Glenvil Hall) said exactly the same thing, but in different terms.

Mr. Jenkins: Of course, he did, but I am not aware that my right hon. Friend or any of my hon. or right hon. Friends have been talking about the gross pro-filigacy of local authorities which they want to curb, or that they have been talking in almost lyrical terms about the mystical concept of a free money market in which the supply of and demand for money is balanced in a way that is greatly conducive to the public good. Therefore, there is nothing illogical in the attitude of my right hon. Friend the Member for Colne Valley, but there is something so


illogical in the attitude of the hon. Member for Kidderminster as to make almost complete nonsense of his speech.
I should like to turn my attention for a moment to the speech of the Financial Secretary. I understood that the hon. Gentleman was perhaps sugaring the pill a little for local authorities in so far as he was putting up the rates of interest at which they could borrow from the Public Works Loan Board by granting them the concession, about which there has been argument for a long time, whereby, if they wished, they should be allowed to borrow for rather shorter periods.
So far as I could see, however, the Financial Secretary has substantially taken away a good part of that advantage by putting up the rates of interest on the medium and short-term loans to a much greater extent proportionately than he has put up the rate of interest on the long-term loans. So that the very thing that the local authorities wanted to do, which the hon. Gentleman has at last agreed that they should do, becomes, at the very moment of their being able to do it, a much less attractive proceeding from their point of view. I hope, therefore, that the hon. Gentleman will not put before the House to too strong an extent the view that that counterbalances the other unpleasant piece of news which he has for the House and for local authorities today.
The other issue which arises directly on the Bill today is whether the general Government policy of dealing with the present difficulty by means of an increase in the Bank Rate is a desirable policy, and what are the objects which they have in mind; and whether passing on some part of that increase in rates of interest to local authorities will help to serve that purpose. It is difficult for us to judge of the effects which the Bill will have during the period in which it is to be in operation unless we can have from the Government spokesman a clear statement of what the Government have in mind about the objects that they wish to achieve by this increase in the Bank Rate which has just been announced, and by a general policy of tighter credit.

Mr. Deputy-Speaker (Sir Charles MacAndrew): Perhaps I may help the hon. Member. I gather that Mr. Speaker's Ruling was that a general economic discussion would be outside the scope of the Bill.

Mr. Jenkins: I am certainly not proposing to embark upon any general economic discussion, but I was anxious—Iam sure you will agree with me, Mr. Deputy-Speaker, in taking the view that this would be both helpful and relevant—to have from the Government a statement of how an increase in the rates of interest charged to local authorities, which is directly envisaged in the Bill, would fit in with and help the objects that the Government have in view in bringing about higher interest rates and a tighter credit policy generally.

Mr. Deputy-Speaker: That is what I said would not be in order. It would be a general economic discussion if we entered on that topic and I would hope that the Financial Secretary would not reply to it.

Mr. Jenkins: Surely, in considering the Bill, we should have an idea from the Government of why, at the present time, they want local authorities to pay 4 per cent. instead of 3¾ per cent. for their long-term money. That is what I hope the Financial Secretary can address himself to when he replies.
We really ought to know what object the Government have in view in doing this. Is it, for instance, because they wish merely to do a rather tidier piece of bookkeeping that they put up the rates of interest charged to local authorities to be, on their face, the same or broadly the same as those prevailing in the market, but that they do not wish local authorities to bear a greater financial burden, and that they will adjust, at any rate as far as housing is concerned, the housing subsidy exactly to compensate for the change which is taking place? If so, it is essential that we should know.
If, on the other hand, that is not the case, if local authorities undertaking particular projects are to have to bear a heavier burden on their rates, we should also know what the Government have in mind. Do they wish local authorities to be more restricted in their capital projects than they have been until recently? Do they wish them to cut down on their housing and school programmes and, as one of my hon. Friends has said, on their programmes, for instance, for road development? If so, this is an extraordinary change of front on the part of the Government in a very short time indeed. It is very fast going even for the


Chancellor of the Exchequer; and we certainly ought to know what the Government have in mind.
I should have thought that if one were justified in increasing the rates of interest and having a tighter credit policy at the present time, one could best do it by reference to the need to get people to reduce stocks so that imports might not get out of hand.

Mr. Deputy-Speaker: That is why I tried just now to stop the discussion from going too wide. The hon. Member is discussing general financial policy.

Mr. Glenvil Hall: May I put this point to you, Mr. Deputy-Speaker? There is a great deal that we cannot understand unless, subject to what you may say, we are allowed to go beyond the immediate Ruling which you have just given. What eventuates is that when the Bank Rate was changed in October, 1953, the local authority rate remained ½ per cent. above the Bank Rate. Now the change announced means that the local authority rate is ½ per cent. below the Bank Rate; and in the rate for loans of up to five years there is almost 1 per cent. difference in the rate announced today. It is so startling that some reason ought to be given to us. It is impossible to discuss it unless something can be said about the general economic situation.

Mr. Deputy-Speaker: That is just what I understood was ruled to be out of order. I think that we can deal with the effect that the rise in the Bank Rate has upon the Bill, but why it has to be raised or lowered, as the case may be, does not arise. That would be debating general economic policy.

Mr. Glenvil Hall: It does not appear to follow the Bank Rate. In one case the Bank Rate went down and the Board's rate was above it. Now the Bank Rate has gone up and the local authorities rate remains below it. There seems to be no rhyme or reason for the Government's action. The only possibility is that there is something in the present economic situation to explain why the Government have acted as they have now, as against the way in which they acted in October, 1953.

Mr. Deputy-Speaker: I cannot remember what happened in October, 1953.

Mr. Pannell: I do not know whether, Mr. Deputy-Speaker, you remember how the hon. Member for Edinburgh, South (Sir W. Darling) spoke about the profligacy of local authorities and went into all sorts of philosophical and other questions. I should have thought that after a speech as wide as that, the debate would be quite open.

Mr. Deputy-Speaker: It is not the hon. Member for Edinburgh, South who sets the scope of debate. It is Mr. Speaker.

Mr. Jenkins: I understand that you are properly anxious, Mr. Deputy-Speaker, to keep the debate strictly within the rules of order, but I hope that I can show you that I was keeping well within the rules when I started the topic which led to this series of points of order.
I was asking—and it appears to be indisputably relevant—whether the intention in putting up the rate of interest which local authorities have to pay was that local authorities should cut down on their long-term capital expenditure, or whether, as is generally the alternative when one considers two forms of capital expenditure and the effect that any rate of interest may have on one or other or the two together, local authorities are to cut down on stocks which they may hold.
The possible reason for making people cut down on stocks might be that it would quickly improve the import position. I certainly did not intend to develop that argument, and I shall not do so now, but before we give the Bill a Second Reading I should very much like to know the Government's answer to a fundamental question. Is it the view of the Government that local authorities, or, for that matter, anybody else, should cut down on long-term capital investment projects, or merely that they should make short-term adjustments, although it is not the case, as far as I am aware, that local authorities carry heavy stocks?
That is the fundamental question which I should like to leave with the Financial Secretary, and to which I hope he will address himself. I hope that he will give a clear answer and not be too inhibited by what the Chancellor of the Exchequer may or may not say when he replies to Questions tomorrow.

Mr. Nabarro: A very remarkable speech.

5.24 p.m.

Mr. C. W. Gibson (Clapham): Whatever criticisms one may have of points which have been raised in this debate, it is a fact that the Public Works Loan Board meets a public need and has done so for many years. Despite the caveman economics which we have been hearing from Edinburgh and other parts of the country, we cannot get away from that plain, central fact. Those who have given any thought at all to the history of our local government must agree that the work of the Public Works Loan Board has been of enormous assistance in financing the activities of our local authorities.
The hon. Member for Edinburgh, South (Sir W. Darling) does not now appear to be in his place, but when I listened to the panegyric which he gave to Edinburgh, I was reminded of the one occasion when that city went bankrupt.

Sir W. Darling: I am in my place, and it is true that the city went bankrupt, but we have learnt our lesson.

Mr. Gibson: The city did learn its lesson, and now it has a loan outstanding of about£26 million, which is exactly what has happened to every local authority that is doing its job. I hope that we shall not allow any caveman economics to deter us from a general policy of maintaining the Public Works Loan Board as the main avenue for local authorities in obtaining the capital which they need for their many great purposes.
I was a little alarmed by one remark made by the Financial Secretary. I hope that I did not hear him aright, but I thought that he said that it was expected that the amount of loans taken up by local authorities would shrink in the near future. He illustrated the point by referring to the figure of£1,200 million which appeared in the 1953 Act and the figure of£1,000 million which appears in this Bill. That rather suggests that the policy behind the Bill is to compel local authorities to reduce their capital expenditure.
I have very vivid recollections of my early days in local government when interest rates of 6, 7 and 8 and more per cent., were charged, and I know the terrific rate burden which those rates imposed on local authorities in the London area. It resulted in the virtual stopping of any road improvements, any

house building, any improvements to schools, and much other social work which it is necessary for local authorities to carry on.
I hope that, far from shrinking, the amount of capital which local authorities spend will increase. Indeed, if the vast schemes which the Tory Party has put in the shop window in the last few months are to be carried out, their capital expenditure must increase. There are, for instance, the vast road improvement schemes, a great part of which will fall on the rates. The Bill to derequisition houses will also impose very big extra burdens on local rates.
There is also the maintenance of the housing drive. Apparently the Government are all in favour of that, though I am sometimes a little doubtful how far they want local authorities to go in building houses. They have certainly not said anything to the effect that local authorities should not be the main vehicle in the housing drive. If all these schemes are to go forward, there must be vast expenditure of capital by the local authorities.
I was also struck by the Financial Secretary's announcement that 74 per cent. of the loans were for housing purposes. Nobody will suggest that the housing problem has been solved yet. A great many millions will have to be spent before we solve it. But the housing proportion of the loans made by the Public Works Loan Board will continue to be around 74 per cent. That being so, it is all the more important that we should know the effect of a rise in the rate of interest. Housing loans, as a rule, are on a 60-year basis. The rate of interest will be raised from 3¾to 4 per cent. Assuming that the local authorities cannot make any substantial reduction in house building costs, that will mean an increase in rent of at least 2s. a week, and probably a great deal more in many cases, for every tenant.
I thought that I detected in the Financial Secretary's voice a rather hesitant note about the announcement which the Chancellor is to make tomorrow in reply to a Question of mine on housing subsidies—that is, assuming that the Question, which is at present numbered over 90, will be reached. Local authorities are entitled to know at the earliest possible moment and before the end of April


whether there is to be any adjustment in the housing subsidies. My experience is that it usually takes many months before any kind of agreement is reached, and it may well be beyond April.
There will be additional costs on the local rates, rates which are already in many cases reaching breaking point; but not because, as somebody has said, the money has been spent in a profligate way. I think that, on the whole, local authorities are extremely well run, and very efficient, I believe that we have a fine body of local government officers who keep us on straight and narrow lines financially. Sometimes they frighten me by the way in which they talk, but they are not profligate.
The increase in local government expenditure which has gone on since the war has resulted in a rate burden which is becoming heavier, and I do not think we shall be able to change the policy that has resulted in this increased expenditure. Therefore, we are bound to look round for new sources of revenue, and I presume I would be ruled out of order if I were to start talking about that just now. But it emphasises all the more urgently the need for a clear statement to the local authorities before the end of next April as to what is to happen to the housing subsidy.
If I may, I should like to express the opinion that, just as the Chancellor reduced the housing subsidy when the Bank Rate was reduced, so logically and in justice, when the Bank Rate is increased, he should increase the amount of subsidy to cover the increase entirely and not on the basis of 25 per cent. of the increase being borne by the local rates unless a new source of revenue, such as I have suggested is found. That would be unfair, and I hope that will be taken into consideration by the Chancellor when he makes his statement.
Nevertheless, I want to say a word of appreciation for the easing of the rule which prevented local authorities dealing with loans on a more short-term basis. I was not at all clear, from what was said, as to exactly how much freedom or easement is going to be given by local authorities to take up loans from the Public Works Loan Board. I have never been able to understand why they cannot be permitted, when the opportunity arises in the normal market, to cash in or lower rates of interest, but apparently have got to go on paying the rate of interest fixed

to the end of the 50 or 60 years' loan period.
It seems to me that anything that would provide them with the opportunity of repaying a loan which is given on a rather high rate of interest by refloating it at a lower rate is worth while and of considerable assistance to local authorities. I am not at all sure as to the exact meaning of the Minister's words of a couple of hours ago, and I hope he will say something more about it when he winds up.
There are a number of other hon. Members who want to speak on this Bill, and I want to conclude very briefly by calling attention to the enormous burden which interest rates already are having in London. Before this House just now there is a Money Bill for the London County Council, and even the hon. Member for Edinburgh, South would not call that body profligate, because it has kept its rates down to 11s. in the£.
It is now finding itself in the position that it has to provide£8½ million every year for increased charges alone, and another£3¾ million for repayments, which means a very heavy charge on the backs of Londoners in having to find over£12 million a year for interest payments and redemption purposes. Unlike the hon. Member who advocated high interest rates, I am inclined to agree that interest is very largely usury and ought to be stopped, but that is not likely to happen. I think it is the duty of the State to give all the assistance possible to the local authorities when they are using funds for great public purposes.
It is no use saying that we ought not to borrow money to provide these services, or that we should do without. We cannot do without better roads in all our large cities. We dare not stop the housing drive in any of our large cities, nor dare we stop building new schools. There are many other services which we dare not stop, all of which cost enormous sums of money, and all of them, unless we are prepared to pay for them out of the rates, as the L.C.C. once decided to do when they had determined to rebuild Waterloo Bridge—it was unnecessary to pay for that scheme out of the rates because the Government of the day climbed down and gave a grant—are going to cost considerable sums in interest if borrowed for long terms.
I hope that we will enable local authorities to get their loans on very much easier terms. Therefore, I heartily support the idea of the Public Works Loan Board. While I do not disagree with the suggestion that if the local authorities want to go elsewhere for some of their money—my own does so at very convenient terms—by and large, for the big stuff, they ought to go to the nationalised Public Works Loan Board, and we ought not to fix a rate of interest which will make these loans so burdensome on local authorities that they may be tempted not to carry out these great improvement schemes like housing, school development and so on, which even the Tory Party are advocating all over the country——

Mr. Kenneth Thompson: And carrying out.

Mr. Gibson: They are not carrying them out; they are in the shop window. If they are not carried out, it will mean a reduction in the general standard of the living of this country. Therefore, I hope the Bill will go through, but I hope that the Minister will find it possible to reply to one or two of the points of criticism.

5.38 p.m.

Mr. A. Blenkinsop: I am surprised that we have not some other Ministers on the Front Bench opposite, because the proposals that have been outlined have such a considerable effect on them. When we were discussing this Measure on previous occasions, such Ministers as the Economic Secretary to the Treasury and others who are immediately concerned were present.
These proposals have been outlined and the new rates of interest for local authorities operating them have such a considerable effect upon operations generally that it would be right if some intervention were to be made by, for example, the Minister of Housing and Local Government to show in what way these increased rates of interest for borrowing from the Public Works Loan Board will be counteracted by immediate increases in housing subsidies.
In fact, the Government have put themselves in an extraordinary position by the new interest rate announced today. I think it is well known that the recent decision—it was quite a recent decision—to reduce the housing subsidy when the

Bank Rate as such was reduced was to come into operation on 1st April. Surely it would have been possible for the Minister responsible to have made an immediate announcement this afternoon to the effect that the decision, which automatically will operate, unless something is done, to reduce the housing subsidy because of an earlier reduction in the Bank Rate, will now be held up.
I am not asking that a new decision should be taken immediately. There must be discussion with local authorities, which we know from experience takes a considerable time. There is no reason, however, why the Minister should not announce now that, since the decision taken some months ago for housing subsidies to be reduced on 1st April is completely out of date as a result of this announcement, steps will be taken by the Government to rescind that Order which, by only a matter of four weeks, has not yet come into operation.
I hope that before this debate is ended we shall have a statement, since it is not satisfactory that the matter should wait for possible answers to Questions which may be asked in the House tomorrow. We ought to have a statement today, because the matter is directly relevant to the Bill we are discussing. It is extraordinary that the Government have not provided us with an opportunity for a statement later this afternoon or even this evening.
As I understand it, some local authorities are already able to take advantage of changes in the Regulations of the Public Works Loan Board which entitles them to borrow for housing purposes for shorter periods than the full 60 years. I believe, for instance, that my own authority is now able, on certain conditions, to borrow for 15 years for housing purposes. Yet according to the announcement made by the Financial Secretary to the Treasury, the interest rate for 15-year loans is to rise by ½ per cent. and not by ¼per cent., which is the rise for loans of over 15 years. Why should the position have been made more difficult for local authorities who borrow for medium term?
It seems all the more extraordinary when this concession was made so recently. It is an example of the muddle into which the Government have got themselves by these continual changes of Bank Rate following continual changes in the Public Works Loan Board rate. When


concessions have been made for the benefit of local authorities to enable them to borrow for shorter-term periods than has been possible in the past, we are entitled to a clear explanation of why part of that benefit should be cancelled by this extra charge for medium-term loans.
This matter affects directly my own local authority of Newcastle-upon-Tyne. Many loan projects tend to be undertaken by this authority for housing purposes within a short period. In one case the Government have just sanctioned the compulsory purchase of a large area of land in the city, but, if that is to go through, it will require a further loan operation, and the cost of that operation will rise unless we have an immediate understanding from the Government about it. This is not a matter than can wait.
In Newcastle-upon-Tyne we are deeply concerned, as are many other authorities, about the availability of land for major housing projects, and it is of the utmost concern to the authority that it should be able to proceed without delay upon its works. It will be fantastic if these works are to be held up because of the financial changes which have been announced. So, before we leave this Bill, we should have a clear statement from the Financial Secretary or, preferably, from some other member of the Government more directly concerned with housing, showing how it is proposed to offset these new, onerous interest rates.
Several of my hon. Friends have said it is fantastic at almost one and the same moment to give this House statements of great new projects of local authority and central government expenditure and then to have the announcement that apparently this expenditure is to be discouraged. We must know which horse the Government intend to ride. Is the increased expenditure by local authorities merely a phantom horse, led out for exhibition before the next election to give an appearance of reality to the good intentions of this Government? Is it that the reality consists of these new financial measures which, to some extent, make nonsense of the promises of encouragement of extra expenditure that have been made recently?
The Government cannot have it both ways. They say it is necessary on financial grounds to have some restriction upon

credit, which we understand is the intention of these proposals. Then they cannot at the same time say that they want to encourage local authorities to spend further large sums of money in accordance with recent announcements. Up to now the criticisms made from this side of the House have been relatively gentle. I cannot understand why they should have been so gentle, because the handling by the Government of this question of interest rates over the last few years is a matter of deep concern. The Government have pushed interest rates higher than they have been for many years. The Government are also open to severe censure because of the way in which they are continuously varying the rates and making it difficult, if not impossible, for local authorities to plan their work ahead with any assurance.
I hope, therefore, that we shall have an early intervention from the Government Front Bench, and preferably that we shall have the attendance here of the Minister of Housing and Local Government, or his Parliamentary Secretary, to explain the effect of this announcement on housing operations, which is a matter of first concern not only to hon. Members of this House but to the population.

5.49 p.m.

Squadron Leader A. E. Cooper: It is astonishing to hear the hon. Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) speaking in such criticism of this Government when we remember that it was he who, as Parliamentary Secretary to the Ministry of Health for a number of years in a Labour Government, was partly responsible, in conjunction with his right hon. Friend the Member for Ebbw Vale (Mr. Beyan), for much of the housing chaos which existed in this country and was still in existence when we took over.

Mr. Blenkinsop: The hon. and gallant Gentleman cannot have heard his hon. Friend the Member for Kidderminster (Mr. Nabarro) who, by implication, was praising the Labour Government for their constant, low rate of interest through the Public Works Loan Board.

Squadron Leader Cooper: I am not responsible for observations which may be made by any hon. Member of the House; I merely express my own point of view. The fact is that there is far more


flexibility for local authorities as a result of the financial record of the Conservative Government than was possible when right hon. Gentlemen opposite were responsible for the affairs of this country. Perhaps I may give an example.
When under the previous Government loan sanction was granted and the authority went to borrow its money, it borrowed all against a development scheme. If it proposed to build 100 houses, it borrowed all the money for the 100 houses, and it is obvious that for a period at any rate no revenue was coming in from rents. It was, therefore, an expensive operation which was imposed upon local authorities by the Labour Government's financial policy. Because of that, rents were unnecessarily high.
For several years when the Conservative Party was in Opposition it endeavoured to get some relaxation of that principle, and in the last two or three years it has been possible for local authorities to borrow money on short term from the banks at a very much lower rate of interest than was possible under the Labour Government. This has given local authorities a degree of flexibility which they have enjoyed very much.
As I read it, the Bill has no relationship whatsoever to interest rates. I regard the Bill as simply making provision for extra finance for local government work, and in that respect it is to be commended.

Mr. Scholefield Allen: Has not the hon. and gallant Gentleman been present during the debate? The whole of the debate has so far been upon the increased rates of interest to local authorities announced by the Financial Secretary.

Squadron Leader Cooper: I am surprised that the hon. and learned Member should make such statements as that, as (if they had any relevance to our discussion. The business before the House is the Second Reading of the Public Works Loans Bill. If hon. Gentlemen opposite have chosen this as an opportunity to attack the Government for their policy in increasing the Bank Rate, that is entirely their responsibility, but the plain fact is that what we are discussing is the Public Works Loans Bill, which is a Bill to provide extra funds to enable local authorities to carry out their work.

Mr. Scholefield Allen: On a point of order. Is it right, Mr. Deputy-Speaker, that the hon. and gallant Gentleman, who has hardly been present at all during the debate, having entered the Chamber only a few minutes ago, should say that hon. Members on this side of the House have been attacking the Government for increasing the Bank Rate? I have heard no attack on the Government—I have been here the whole time—for increasing the Bank Rate. The complaint has been the increase in interest rates to local authorities.

Mr. Deputy-Speaker: That is not a point of order.

Squadron Leader Cooper: I may not have been sitting in this particular place, not that it is of any relevance to the hon. and learned Gentleman, but if hon. Gentlemen opposite would be good enough to read some of the speeches which they have made, which appear on the tape machine, they might get an entirely different idea of what the debate is all about.

Mr. Scholefield Allen: If you had been here your speech would have been more relevant to the debate.

Mr. Deputy-Speaker: I have been here for a very long time.

Mr. Jay: May we at least assume, Mr. Deputy-Speaker, that it is for you to give Rulings as to the scope of the debate and not hon. Gentlemen below the Gangway?

Mr. Deputy-Speaker: Yes, and I hope that my Rulings will be carried out.

Squadron Leader Cooper: Although it may be news to hon. Gentlemen opposite, the Bill is for the purpose of providing further funds to enable local authorities to carry out the work which is laid upon them by statute, and we should commend it.
All local authorities are impressed by the manner in which the Public Works Loan Board carries out its duty. The greater flexibility with which these affairs have been conducted has been very noticeable during the last two years. I am sure that that greater ease can be laid at the door of my right hon. Friends in the Treasury by reason of the excellent manner in which the country's finances have been operated during the last three years.

5.55 p.m.

Lieut.-Colonel Marcus Lipton (Brixton): I shall not waste the time of the House by dealing with the speech by the hon. and gallant Member for Ilford, North (Squadron Leader Cooper). The hon. and gallant Member has not been in the House to hear the debate; he does not know what it is all about, and his speech had no relevance to anything that preceded what he said or will succeed his remarks. I propose to address myself to the speech of the Financial Secretary, which, unfortunately, the hon. and gallant Member for Ilford, North did not have the advantage of hearing; otherwise, he would not have made the speech that he did.

Squadron Leader Cooper: On a point of order, Mr. Deputy-Speaker. There are two points to which I wish to refer. First, I do not happen to be the hon. Member for Ilford, North, and, secondly, I heard the speech of my hon. Friend.

Mr. Deputy-Speaker: I wish hon. Members would not raise as points of order matters which are not points of order at all. They must know they are not.

Lieut.-Colonel Lipton: If what the hon. and gallant Member says is the case, his speech is all the more surprising. If he did hear the Financial Secretary, his speech is even more irrelevant and useless.
I hope the Financial Secretary has read the speech that I made in 1951 during the Committee stage of the Public Works Loans Bill. He will find it in Hansard of 28th November, 1951. I will not recapitulate what I said, but merely give the hon. Gentleman the reference and hope that he will have a look at it. I also hope that he will look at a speech that I made in 1952. and I will again content myself by telling him that he will find it in Hansard of 19th November, 1952, also during the Committee stage of the Public Works Loans Bill.
The argument can be very briefly summarised in a sentence, as follows:
The work carried out by this organisation "—
I am referring to the Public Works Loan Board—
could just as well be carried out by the Treasury exercising general control over the operations of the National Debt Commissioners, who, in the course of their duties,

are just as capable, subject to Treasury control, of making the further advances that are necessary to local authorities."—[Official Report. 28th November, 1951; Vol. 494, c. 1,584.]
Nothing at all has been done by the Government since that date, and we are treated to the same dreary repetition year in year out of the Bill coming before the House and the Public Works Loan Commissioners having placed at their disposal an additional amount which does not need to be placed at their disposal at all because they should have ceased to exist long ago. The Board is by now an anachronism.
The Borough of Lambeth, of which the constituency that I represent forms part, is a very good customer of the Board because Lambeth believes in borrowing from official or Governmental sources. The Financial Secretary is not so long separated from local government as not to be able to recollect a number of matters connected with the London County Council and Metropolitan boroughs generally. I hope that now he has reached a more elevated station he will not forget the very many years during which he was associated with local government in London.
The Metropolitan Borough of Lambeth—I quote the figures for 31st March, 1954—out of a total debt of£4·8 million, borrowed no less than£3·6 million from the Board, roughly 75 per cent., and the average rate of interest on that amount was 3·39 per cent. Unfortunately, that figure looks as if it will go up as a result of recent developments and the economic difficulties in which the present Government find themselves.

Mr. Nabarro: The hon. Member quoted a rate of interest of 3·39 per cent., but, as he and his party are advocates of the policy of cheap money, can he say why the Borough of Lambeth did not buy the infamous "Dalton" stock at 2½ per cent.?

Lieut.-Colonel Lipton: The hon. Member seems to think that the Metropolitan Borough of Lambeth came into existence only about the time that my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) was Chancellor of the Exchequer. The Metropolitan Borough of Lambeth came into existence a good time before that. The borough's finances included in this figure of£3 6 million covered a period of many years past. For


instance, during the period of the Coalition Government, after the First World War, we had to borrow at 6 per cent. and 7 per cent. I am taking the average for all the loans over that period up to 31st March, 1954, and that figure is 339 per cent.
I want to support what was said by my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop). It must surely be in the public interest, both locally and nationally, that local authorities should borrow on short-term rather than on long-term when they are in a position so to do. In those circumstances it strikes me as very odd that the interest rates announced by the Financial Secretary seemed to impose an additional liability upon those local authorities who want to borrow on short-term. The result is that local authorities who want to borrow for a period of up to five years will have the interest rate stepped up by seven-eighths per cent., whereas if such an authority wants to borrow money for fifteen years, or more, the interest rate has been stepped up by only ¼ per cent. That surely does not represent a proper appreciation of the position, nor does it give the right emphasis to local authorities who want to borrow money for a short term.
The Financial Secretary will no doubt recall that as recently as 25th November last representatives of the Metropolitan Boroughs Standing Joint Committee called at the Treasury to discuss various aspects of the Public Works Loan Board's work. One of the points which they submitted to the Treasury was that local authorities should be permitted to enter into mortgages for terms of less than seven years. The Financial Secretary has stated that the points made on that occasion would be noted. The fact remains that local authorities are responsible bodies and should be allowed to conduct their finances in the way that they think best, without too much interference from the Treasury.
I am not saying that the Treasury should not exercise the right of control, but the regulation to which I have referred seriously restricts local authorities in securing the best borrowing terms. I hope that the Financial Secretary and the Treasury will find it possible to allow local authorities to enter into mortgages for a period of less than seven years.
The second point which the Metropolitan Boroughs Standing Joint Committee representatives put to the Treasury was that the Board should be empowered to make maturity loans. The Financial Secretary said on that occasion that it was the aim of the Government to keep such borrowing to a minimum and that the present rule was of positive assistance in achieving that. However, the view of local authorities, in London at any rate, is that the Board should be empowered to make maturity loans. At present the Board may make loans repayable by annuities, or instalments only. That is a restriction which operates to the disadvantage of local authorities, especially those local authorities where the pooling of loans is in operation.
The reply of the Financial Secretary was that such borrowing should be kept to a minimum. Local authorities do not understand this attitude of the Treasury. Where maturity loans are operated under the pooling principle, repayments by borrowing accounts—I am sorry to have put this in such technical language—are used to finance further capital expenditure, thus avoiding recourse to external loans. It must surely be to the advantage of all concerned that local authorities should not be compelled to resort to external sources for the loans that they may require.
The third point that the local authorities in London wanted the Treasury to 'consider was that the Public Works Loan Board should be at liberty to make loans for periods less than the full term of the loan sanction.

Sir W. Darling: Will the hon. Member read that again?

Lieut.-Colonel Lipton: They wanted the Public Works Loan Board to be at liberty to make loans for periods less than the full period of the loan sanction.

Sir W. Darling: That is not what the hon. Member said before.

Lieut.-Colonel Lipton: If the hon. Member for Edinburgh, South (Sir W. Darling) will allow me to explain, he will learn something that will prevent the City of Edinburgh going bankrupt in the future as it did on one occasion in the past. The hon. Member is full of curious ideas.
The Financial Secretary was perhaps in the same difficulty as the hon. Member


for Edinburgh, South, because he asked local authorities to prepare a paper setting out the concessions which they were seeking. I think that that was done. The Board is not at the moment at liberty to make loans for periods less than the full term of the loan sanction. There is a Treasury circular of 27th August, 1954, which relates to the matter, and that applies only in the case of loans for services for which there is either no Exchequer subvention, or any such subvention is not directly or indirectly related to the loan charges. I hope that the Financial Secretary will look into that, because here again the minimum borrowing period of seven years applies, save where sanction is given for a period of less than that.
There is just one further point to make in conclusion. It is the desire of local authorities that local authorities' debts should have trustee status. I know that that does not arise under the Bill, but I very briefly mention it in passing so that the Treasury may think about it and perhaps make an announcement on the subject in due course. I hope that the Financial Secretary will pay some heed to the weighty representations that have been made to him by the organisations representing all the Metropolitan Borough councils, because if he grants their request, it will be for the advantage of local government, at any rate in London.

6.10 p.m.

Mr. William Ross: The importance of the Bill can be judged by the figures given by the Financial Secretary when dealing with the amount of money that had been lent by the Public Works Loan Board under the 1953 Act. I think that he said that up to and including last month the total loan was about£413 million. He told us exactly the purposes for which the loans had been granted.
We are dealing with a very important subject indeed from the point of view of the local authorities and the ratepayers. It was rather unfair that a colleague of mine from Scotland, the hon. Member for Edinburgh, South (Sir W. Darling), should, quite bluntly, attack local authorities, including those in Scotland, for profligacy. I began to wonder whether he was speaking as the proud past provost of Edinburgh, or just as that "bankrupt bookseller" whose memoirs

I have heard of, or as the director of a Scottish bank. I am not entirely sure that the point of view he put forward would be accepted even in his local authority circles in Edinburgh.
It was the customary homily which we get from the hon. Gentleman. We have heard him before on subsidies; he does not like them. He is the modern Samuel Smiles on this aspect of finance. However, when we consider the purposes for which the loans are required, it is unfair to accuse local authorities of profligacy and to suggest that they should wait until they can afford a project and then put the whole lot down. Edinburgh would not have been such a pleasant place today if that had been done, nor would some towns in Scotland.
If we had to wait for local authority enterprise for the building of, say, the Forth Road Bridge—and he found considerable difficulty in getting people to offer to subscribe money for that purpose—then we should never get it at all. We should remember what we were told by the Financial Secretary. He said that the main purpose for which money was borrowed under the last Act was house building, for which about£250 million was loaned. Then he instanced education, roads, water and drainage. When we take into consideration that the Government have been proclaiming to the country just exactly what they intend to do about the extension of the building of rural schools, we must appreciate that a great burden of expenditure for that development will fall on the local authorities.
The Minister of Transport told us recently that he could not go into a full detailed programme of what will happen under the great highways project because first he must consult the highway authorities concerned. These authorities, again, have a financial interest. When we consider these schemes of education, housing and roads which will benefit not only the present but future generations, it is right that they should be financed in this way. But, taking that into consideration, it is not out of the question, as the hon. Gentleman suggested, that we should consider exactly what will be the effect of the announcement made, not the other day, but today at the start of the debate, by the Financial Secretary when he said that the Government had decided that the


period of instability was over and that they could raise the rate of interest from 3¾ per cent. to 4 per cent.
What was the purpose of that? What will be the effect? As far as I can see, there can be only two effects. The first might be to deter expenditure by local authorities.

Sir W. Darling: It might be a good thing.

Mr. Ross: To say that it might be a good thing does not mean anything at all. In fact, we have been told by the Government that the expenditure on roads is a good thing, that it is urgent and it must be done, and that it would be profligate to allow the neglect of our system to go on much longer. The same applies to education. There is no doubt that by deterring expenditure the Government will be deterring something that should have been embarked upon long ago. I do not see any justification for that. It cannot properly be justified.
Before any of these projects can be embarked upon they must first be authorised by the Government Departments. Therefore, the profligacy, if there be any, can only be laid at the door of the Government Department and not of the local authority, because the Department must sanction a scheme before a loan is made. That is the first weakness. It may well deter local authorities from embarking upon schemes which are desirable from the point of view of the community.
In Scotland we have had a Commission considering the question of suggested rating changes. One of the first things it said before recommending any change at all was that the local rating should not be overloaded. It was implied that it was already overloaded. It is undoubtedly the position that any future borrowing by a Scottish local authority will add a further burden to Scottish rates, because the rate of interest has been increased from 3¾ per cent. to 4 per cent. and we have a position in which rates are already overloaded.
The Commission suggested that the rates are overloaded, and the Government are about to put a further burden on the local authorities, which, in considering the desirability of a project and its financial feasibility, may well mean that the pro-

gress which we should be making in education, rates and house building may be stopped.
The other feature is that it makes it more costly for the local authority to go ahead. Therefore, again the burden falls directly. If it is housing, the burden falls upon the tenants of local authority houses. The hon. Member for Edinburgh, South should know that the rents of local authority houses in Scotland are too high, and we are in a favourable position compared with England in that when such subsidies were cut in England they were not cut in Scotland. We were promised by the Government that the question would be reconsidered, and it may well be that the Secretary of State for Scotland will announce tomorrow that the subsidies will be cut.
We are getting into a rather chaotic position in the one country compared with the other. The Government ought to make the position clear. What do they aim at in making changes in the interest rates? What do they consider the effect will be? Looking at the position objectively, I am certain that there will be two effects. One will be to deter certain local authorities, for no other reason than that it will be too costly; and the other will be to make it more costly and to add a greatly increased burden to the rates of already hard-pressed local authorities.

6.19 p.m.

Mr. Kenneth Thompson: Unlike almost everyone who has spoken, I make no claim to be an expert in local authority finance. Nevertheless, I welcome the Bill, because I have an admiration and respect for the work of the Board which discharges a difficult task in an impartial and most successful way, and because I believe that the Board's facilities, alongside the facilities which we were able to make available a little while ago for local authorities to go to the free money market, provide something nearly approaching a good workable system of raising money for local authority capital projects.
My experience as a member of an important local authority for a fairly long number of years convinced me that almost every project which comes before a local authority committee, whether it be the parks and gardens committee, the children's committee, the education committee or the watch committee, is in its broad approach a desirable one. The


members can range from dressing room facilities and sports fields to the building of new police garages to serve the outer areas of the cities, and back again to technical college extensions, and so on.
Look where we will, the whole range of ideas that come before the members of a local authority committee are, almost without exception, in themselves quite desirable. The great problem to be settled by the members of a local authority—and settle it they do month after month—is the order of priority, since all these ideas cannot be embarked on at once. Even were such a local authority committee to decide to go on with all of them, the capital resources would never be available. There has to be some process of sifting the most desirable, urgent and essential from those which can take a lower place in the order of priority.
Part of the proposal made this afternoon by my hon. Friend the Financial Secretary will result in a careful appraisal of the priorities which local authorities wish to see made effective. It is up to local authorities to make that first decision—whether it is to be a new garage, or an extension of their slum clearance programme, or their school building programme——

Sir W. Darling: Or none of them.

Mr. Thompson: —or, as my hon. Friend interjected, not any of these things at all because the local authority has decided that it cannot afford them.
I believe the system by which local authorities now can raise money—either through this Public Works Loan Board at 40 to 60 years at 4 per cent., or through the money market, if their condition is such that they can get it better and cheaper that way—probably secures for them the best of both worlds. My real complaint, and what I regard as the real weakness of the present position of local authorities in this country, is that they have not been left with enough responsibility for the decisions they take in making these orders of priority. Most of the decisions reside in the Government Department which presides over that section of local authority affairs. It is not the councillors sitting in committee who have the final and absolute say, but Government officials who are able to condition the minds of members of a local authority long before it considers the projects.

Mr. Pannell: I do not wish to defend the Government, but before the hon. Gentleman indicts the Government, I hope that he will get the record straight. Some 70 per cent. of all local authority costs are in wages and salaries, which are regulated by trade union agreements over which the local authorities or the Government have little control. Unless one understands that part of the picture, one can never understand the rising figure of rates.

Mr. Thompson: I am grateful to the hon. Gentleman for reminding us of what happens to the revenue expenditure of local authorities. But the House is now devoting its attention to the capital expenditure of local authorities, which is an entirely different matter.
It would seem to me that we could get the best of both these worlds were we to allow local authorities more control over their own financial operations. Then a local authority, large or small, which conducted its affairs with economy and efficiency, with the kind of far-sighted judgment to which my hon. Friend the Member for Edinburgh, South referred—with parsimony if it felt so disposed—would be able to by-pass the high interest rates of the Public Works Loan Board—if that is what they are—and, with a shining reputation for economy and efficiency, obtain better terms in the free money market. That should be the real standard by which a local authority could judge how far it could go.
In such conditions a vigorous, alert and efficient local authority would get the best results for itself, in terms of the price at which it could borrow money, and give the best service to its electors in terms of the amount and number of schools, housing estates, and so on, which it could provide. I should like to see an examination of the whole process by which local authorities discharge their responsibility as collectors of income and investors of capital resources.

6.25 p.m.

Mr. Scholefield Allen: This Bill, which the hon. and gallant Member for Ilford, South (Squadron Leader Cooper) thought fair to remind us was concerned only with allotting£500 million and placing it at the disposal of the National Debt Commissioners, may in fact raise quite profound, far-reaching and disturbing matters. One thing to


which I wish to draw the attention of the House is the effect on rural authorities.
For years now we have been endeavouring to increase the food production of our land. One of the difficulties which we have encountered is the falling off in the number of farm labourers employed upon the land, the difficulty of attracting men to work on the land and keeping them there. Mine is mainly a rural constituency, though people are inclined to think of Crewe only as a railway town. In fact it covers 20 by 18 miles of the best of rural Cheshire—where we make the best Cheshire cheese. The rural authorities in that area have been concerned with the problem of attracting farm workers to the land.
One of the chief problems is that in these agricultural areas there are tied cottages to which the workers object. The Labour Government were unable to abolish the tied cottage and this Government have been unable to do so, although the Agricultural Workers' Union has pressed for it and demanded it all through their existence. This is relevant to our discussion today and I must make the point. We were told, "If you will bide your time we will solve the problem of the tied cottage by the building of houses by local authorities." A number were built in my constituency, and now the great difficulty is that the farm labourer cannot afford to pay the high rents charged for those houses, even at the present rates.
Now I come back to the consequences of this Bill, and the announcement made today by the Financial Secretary who announced an increase in the interest rates on money borrowed by local authorities. The rate which he has announced will affect rural houses to the extent of 2s. 6d. a week. Farm labourers are at present only barely able to pay the rents demanded, and if they are called on to pay another 2s. 6d. a week, I do not think that, even were they built, the houses would be occupied.
The Government have raised the Bank Rate, with all its consequences, and the interest rate, and I appeal to them to state what they propose to do about the subsidy. The sooner they tell the rural authorities in Cheshire that they will make up this 2s. 6d. a week by a further subsidy, the better those authorities will be pleased.

6.29 p.m.

Mr. Niall Macpherson: I do not intend to follow the observations of the hon. and learned Member for Crewe (Mr. Scholefield Allen). My first question is related to the time for which this Bill is expected to run. The Financial Memorandum says that the sums
may suffice for rather longer than the period of approximately 12 months which was usual in the years prior to the passing of the Public Works Loans Act, 1953.
As I understand it, the amount drawn in the year ended April, 1954, was£300 million, which was short of the budgetary provision by about£100 million.
My hon. Friend the Financial Secretary now tells us that in the current year up to date, or practically up to date, the loans granted have amounted to£413 million. There is obviously a very much higher level of borrowing than there was in the previous year. I wonder if my hon. Friend can relate that fact to the announcement which he made with regard to the interest rates, and also give his estimate—in the light of that announcement—of the amount of borrowing to be expected in the next financial year.
I suppose that we should not have spent so long upon this Bill had it not been for the announcement made by the Chancellor of the Exchequer last week. Would my hon. Friend say how far the announcement made today with regard to interest rates was related to that made by the Chancellor?

Mr. Pannell: I must correct the hon. Member. I think that I have taken part in all these debates since this Government came to power. As a matter of fact, the debates have all taken a fair amount of time, because the Government have pursued this erratic policy of juggling with the interest rates. Within a month of coming into power the Government put up all municipal rents by 4s. 4d. a week, as a result of increased interest rates.

Mr. Macpherson: That reinforces my point. If there had not been an alteration of this kind——

Mr. Pannell: It has happened every year.

Mr. Macpherson: That is because there had been alterations in the past.
The Bank Rate is one of the principal instruments for influencing our economy and finances under the present Government. That being so, it is bound to vary from time to time. The underlying question is whether the borrowing rates of local authorities should vary—not necessary pari passu but at least in relationship—with the Bank Rate.
The hon. Member for Islington, East (Mr. E. Fletcher) suggested that it created hardship for local authorities when interest rates went up. It is true that if some local authorities borrowed money just before the rate went up and others did so just afterwards, the latter might feel that they had missed the boat, just as the hon. Member would if he were raising a loan from his own bank. We must bear in mind the fact that most local authorities go to the Board several times a year. I gather that urban districts average seven times per year.
That being so, the loan rate can be spaced out fairly evenly over a period, and the fact that it alters from time to time does not have the same effect as it would if local authorities went to the Board only once every three or four years. Local authorities know in advance that borrowing rates will vary from time to time, and they can to some extent take internal measures to even out the effect to some extent.
The Bank Rate has risen considerably more than the rise in the long-term borrowing rate announced today. I should like my hon. Friend to tell us the relationship between those two rates. Is it that the Treasury is making its contribution in evening out the situation? My hon. Friend the Member for Kidderminster (Mr. Nabarro) seemed to think that there should be no change at any time in borrowing rates to local authorities. He thought that if the market rate were lower local authorities could all go to the market for their loans, and if it were higher, they could go to the Board. I scarcely think that that system would commend itself universally.
It has been suggested that the purpose of this alteration is to slow down public works, such as house building. If it were the intention to slow public works down very considerably, I am sure that my hon. Friend would have made an announcement of an alteration in the interest rate

at least commensurate with that in the Bank Rate.

Mr. Pannell: The reason why this small change of ¼ per cent. is made is that the interest rate of the Board is tied up with housing subsidies.

Mr. Macpherson: I was coming to that point, but if it had been the intention to arrest the rate of house building an increase of£ per cent. would not have been announced today.

Mr. Pannell: It makes a difference of 2s. a week.

Mr. Macpherson: This change appears to be somewhat of a token increase because the Bank Rate has increased. I hope that my hon. Friend will comment upon that suggestion.
I should also like him to tell the House something more about the short and medium-term borrowing rates. If my information is correct, the short-term borrowing rate, up to 3rd June last year, was 25/8 per cent. I gather that although the long-term rate is now to be 4 per cent. the short-term rate is to be 3⅛ per cent., and the medium-term rate 3¾ per cent., as against 3½ per cent. to last June. I hope that my hon. Friend will tell us the reason for these variations.
I might try to anticipate his answer-probably wrongly—and say that the purpose which the Government had in mind was to encourage the kind of purposes for which local authorities need long-term loans rather than those for which they need short-term loans. If that is so, it would account for the fact that the increase in the long-term borrowing rate is fairly low.

Mr. Pannell: That covers house building.

Mr. Macpherson: Yes.
I understand that the length of the loan is related to the life span of the asset. It may also be the case, as the hon. Member suggests, that there is to be a compensating housing subsidy. We shall hear about that tomorrow. That would also affect the result, on local government finances, of the increase in the borrowing rate.
These are points upon which the House would like a little further information. I am quite certain that the underlying question is whether the borrowing rates ought


to vary when the Bank Rate varies. My view is that it would be impossible to insulate local authorities altogether from measures taken for the economic and financial good of the country, and that there is bound to be some variation.

6.40 p.m.

Mr. Charles Pannell: I should like to take up the hon. Member for Dumfries (Mr. N. Macpherson) on one point which I think he missed. The housing subsidies were recast on the last fall of interest rate which, I think, will take effect on 1st April, 1955. At that time, the Government envisaged a steady interest rate. In the interim period, the rate of interest has been increased. If it had been put up to the full 1 per cent., then the local authorities would have said, "This bears no relevance because the housing subsidies were negotiated with the local authorities association on the assumption of a certain interest rate." If the interest rate had been put up on houses of£2,000 by 1 per cent. this would have meant, on the information which I have, an increase of at least 7s. per week per house.
A local authority never borrows money until it needs it. Very often it uses its internal balances to lean upon and then goes to the Public Works Loan Board. Local authorities fund their enterprises—raise money locally according to their prestige and their securities; but they raise locally all the short-term money which they want. Yet the hon. Member for Edinburgh, South (Sir W. Darling) spoke about Edinburgh doing this as though that was something marvellous. I believe that one of the first things which the Government did on the outbreak of war was to stop local authorities going into the market and mopping up short-term money, because they wanted it for war purposes. This policy of mopping up short-term money which was carried on by successive Chancellors of the Exchequer forced local authorities to go to the Public Works Loan Board.
My right hon. Friend the Member for Bishop Auckland (Mr. Dalton) introduced his cheap money policy at the time when the local authorities were forbidden to mop up short-term money in their own localities, and his cheap money policy must be considered in that context. I can remember the case of a small local authority responsible for some 40,000 people

for which the change in monetary policy whereby they could not take up short-term money meant a 2d. rate.
It is true to say that many of the consents for borrowing are taken up only when tenants are actually in the houses. Therefore, a severe upward movement in the Bank Rate and a smaller upward movement in the Public Works Loan Board's rate upsets the estimated cost on the rates. A local authority will long previously have estimated what a house would cost to build and what the loan would involve. No local authority, whatever its political colour, likes to advance the rents after it has entered into an agreement with the tenant possibly only a month or two earlier.
The Public Works Loan Board bases its loans over the full maturity period of the houses, which may be 60 years for the houses and possibly 80 years for the land. If the Financial Secretary had said today that the interest rate was to be increased by 1 percent., the local government authorities would have to say that their present agreements were null and void and would have to enter into fresh agreements. A change in the Bank Rate causes an avalanche of applications for loans to the Public Works Loan Board. Those who get in on the ground floor—by an early post—may do so at a lower interest rate than those who apply later. I suggest that that is not the kind of public finance which we want. It is not conducive to dignity or efficiency. Local authorities require some evidence of stability in the Bank Rate.

Sir W. Darling: How are we to arrange stability. We must have some basis.

Mr. Pannell: That is true. If the charges are not paid in interest, they have to be paid in subsidies. There ought to be some reasonable, sensible, middle way. I have protested before in this House that housing subsidies are running at a ridiculous rate, bearing in mind all the circumstances. On a previous occasion, I gave the House some figures. They were the highest figures which I thought I could mention with accuracy, but one of my hon. Friends who has great knowledge of London County Council told me that my figures of housing subsidies were low. We have to bear in mind that interest rates have always to be balanced against the subsidies.
I want to refer to something said earlier by the hon. Member for Edinburgh, South. He and I are old friends in this field. I remember the first conference of the Institute of Municipal Treasurers to which I went. He had a public debate with the City Treasurer of Glasgow—on the burden of the rates—who is now a noble Lord in another place, who said that he did not like the use of the word "burden." He said that it was an evil, question-begging word which suggested that people, were being charged for something which they should not pay. I remember the hon. Member for Edinburgh, South entertaining us then, as he did this afternoon, on the subject of the economic prudence of Edinburgh compared with other towns.
Let me give the hon. Gentleman figures, which may surprise him, of the outstanding loan-debt. He made the point that Edinburgh raises its money locally on the good will of the tradesmen and burgesses. He made no allowance for the difference in rating law between England and Scotland which enables Edinburgh to do things that London cannot. A Scottish city can rate for a contingency years ahead, whereas budgeting for the future is illegal in England. We must not budget above the figure that we need. The difference between a person and a local authority in law is that an individual can do anything he likes within the law, while a local authority can do nothing unless the law allows it. Scottish local authorities are in a favourable position.
I got a return of the outstanding loan-debt of the local authorities for 1954, but I could not find the return for Edinburgh. I got the figures from the Institute of Municipal Treasurers, and they show that the outstanding loan-debt of Edinburgh in 1953 was£26 million. The population of the city is 475,000. The outstanding loan-debt of London is nearly£204 million. The population of London is 31/3 million. That shows that the loan debt per head of London is very much lower than that of Edinburgh.

Sir W. Darling: I understand that the hon. Gentleman is congratulating me on putting forward a Tory argument in a Socialist way, with all its compulsions.

Mr. Pannell: I want to mention some of the other things that the hon. Gentleman said. He was asked a question by

the hon. Member for Kidderminster (Mr. Nabarro), who is not as acquainted with local authority affairs as is the hon. Member for Edinburgh, South, as was exemplified by his speech. He said "Sell your houses."

Sir W. Darling: It was suggested by the hon. Member for Stechford (Mr. Roy Jenkins) that local authorities had no stocks at their disposal except a few bags of cement, a few wheel barrows and trenching materials. I said they had an important asset; let them sell their houses.

Mr. Pannell: Let me refer to the right hon. Member who represents Bromley, a place which I prefer to Edinburgh. The Conservative council there rejected unanimously the idea that it should sell its houses. It was moved by the very human consideration that every council house sold is one less in the rent pool.
We must ask whether the Bank Rate is to stop where it is. That point is relevant to the argument that I am advancing that house rents should not depend upon a fluctuating Bank Rate or upon Government financial policy.

Viscount Hinchingbrooke: Why should council tenants be allowed to hive off from the general economic conditions of the country?

Mr. Pannell: I will listen to the noble Lord on matters like German rearmament, subjects on which he has authority to speak. His intervention shows that he has not an idea on this subject. Every council tenant during the inter-war years received from public funds a subsidy averaging 4s. 9d. per week. Now he is receiving about 13s. I am concerned with balancing that amount. Rents are high enough, in all conscience. I have already said in this House that the subsidies should be offset by the proper renting of garages. It is no use the hon. Member for Edinburgh, South saying that that is something novel. In another context I would be prepared to argue that point. I would refer hon. Members who want to read the argument to my last speech on housing subsidies. I basked in reflected glory on the following day when the broadcasting panel discussed that subject.
The hon. Member for Kidderminster wanted an answer from the Financial Secretary to the Treasury as to how much


of the global sum borrowed by local authorities was from the Public Works Loan Board and how much from the open market. The figure is not difficult to find, because the Institute of Municipal Treasurers publishes the information from year to year. I would like to refer to an idea which I think is in the minds of some hon. Members, that the bulk of the money borrowed is raised from the Public Works Loan Board. That is not true, as I will show.
In Leeds, for example, which shows up quite well with Edinburgh, we find that the outstanding loan debt is£38,800,000. It has about£11½ million of stock, or rather less than that—£11,346,000. It has borrowed£14| million from the Public Works Loan Board, and carries£136,000 in mortgage instalments and annuities. Other loans and interest on bank overdrafts amount to£1,750,000, which is very much the same sort of thing as in the case of Edinburgh. This is rather curious, and I looked up the figures which I have given because they are rather typical of the boroughs. I have quoted Leeds, not only because I happen to represent it here, but also because it is typical.
It is also rather curious, if we take the case of the City of London, which is a far heavier borrower from the Public Works Loan Board than the other cities. It so happens that the City of London, with a population of just over 5,000, has an outstanding loan debt of over£13 million, which rather disproves the argument of these business gentlemen who think that they ought to have two hon. Members in this House. It is even more curious that, out of the£13 million, over£9,500,000 has been borrowed from the Public Works Loan Board. I ask hon. Members to take this on trust, but, in effect, the City of London is a comparatively smaller borrower from outside sources than the great provincial cities normally are. I do not know whether the citizens of London are happy about that.
This question of the outstanding loan debt is a very considerable one for the local authorities. I can remember when I was standing for election to a local authority in about 1938 writing a pamphlet which I called "Turn The Spendthrift Tories Out." My friends and I wrote that pamphlet on the idea that

one small local authority was paying£10,000 a year in interest on outstanding loans and was not financing enough from revenue.

Sir W. Darling: Socialists are always borrowing.

Mr. Pannell: That is all right, but this was a Tory council; I said that the title of the pamphlet was "Turn the Spendthrift Tories Out," because they had been in power for 16 years.
Manchester has a standing resolution that it must spend a 6d. rate from revenue on capital undertakings, and it is completely wrong to suggest that Labour-controlled authorities generally borrow more than Tories. If we take the case of borough authorities, it is the Tories who improvidently borrow money because they worship a low rate figure and not the Socialists.
The hon. Member for Liverpool, Walton (Mr. K. Thompson), who is not now in his place, sought to correct me by saying that I was getting revenue expenditure mixed up with capital expenditure. I was not. What I did say was that when we criticise local authorities for squander mania, we ought to bear in mind that the local authorities have very little room in which to manoeuvre, because 70 per cent. of the money raised by the rates in any city—and I am not making a political point—usually goes in salaries and wages, which are fixed by trade union agreement or some other basic agreement over which the authority itself has no control at all.
As a matter of fact, "The Times" today refers to the depredations of town clerks in that direction. It is a most curious set-up whereby town clerks not only increase their own salaries as employees, but, as representatives of the employers, vote themselves an increase of salary; but that is another question altogether.

Viscount Hinchingbrooke: We do that, too.

Mr. Pannell: The noble Lord says that we do that also. If he is raising the question of Members' salaries, I would remind him that John Stuart Mill said that an unpaid legislature and judiciary are things essentially aristocratic. If that is so, I should expect the noble Lord to support the aristocracy; but we will leave it at that.
The hon. Member for Walton also spoke about priorities. From the way he spoke, one might imagine that local authorities could decide these priorities in a highly objective frame of mind. They cannot. Not only do they pay 70 per cent. of their rate income in wages and salaries, which are obligations laid upon them, but, of course, all the local services from the cradle to the grave are also obligations upon them. If a sewerage scheme "goes west," they cannot say "We will put it down the list for five years hence." It must be attended to at once, and there is usually a great deal of fuss if it is not immediately remedied.
When we consider new estates being opened up or new towns being built, whether they are represented here by Conservative hon. Members or not, these are the places where there are home owners in process of buying their own homes—the sort of lusty neighbourhood breeding children as well as reading books, which very soon will produce demands for services in regard to child welfare and schools. It is worth while remembering that education is now the highest of all the items in the rates. That sort of thing will have its reflection in the cost of our schools, and we need to be reminded of it.
It is the fact that for three centuries the highest precept in the levying of a rate was that for the poor law, but that has gone. Possibly, it is a measure of our progress that the highest precept today is that for the education rate, and local authorities all over the country are complaining about it.
I do not want to go into the whole question of the grant system, but hon. Gentlemen opposite are most anxious to lend their support to the position of the grammar school teacher as a person holding a position of special responsibility. They say they want to increase his salary. They ought to remember the fact that 70 per cent. of a local authority's income goes in salaries and wages, and, of course, there is also the question of priorities in regard to new schools to be built. People will put up with a good deal, with bad housing conditions and bad services, but they will still insist on the best possible education being provided for their children.
Hon. Gentlemen on both sides of the House know very well that if they want

notes for a speech, they can best tug at the heart-strings of their audiences by making speeches about the provision of better education for children today than the parents of those children ever knew. That is the sort of thing to produce an effect, and not even the hon. Member for Edinburgh, South is immune from it. As Lord Provost of Edinburgh, he graced many an undertaking of this sort, and, though he may deplore, as he did on a previous occasion, that local authorities are only too prone to put up expensive public conveniences, he did not include education as coming within that designation.
It is the same in regard to houses and roads. Quite recently, there was a fatality in my own constituency, and the Ministry of Transport were as apprehensive about it as I was, but local authorities cannot be objective bodies in the same way as this House can be objective. Local authorities have the pressure of local circumstances and of the local population upon them to provide, in regard to education, that a child should have the same chance as between one local authority area and another. The hon. Member for Walton was completely wrong when he seemed to think that local authorities had plenty of room for manoeuvre. They have not. And now, of course, we have circumscribed them with regard to an expensive interest rate, which will increase the rates throughout the country and the cost of services generally.
All this is in line with everything else that the Government have done. They have been clumsy and ham fisted. Obviously, the Chancellor of the Exchequer did not anticipate this debate when he made his announcement on Thursday. When my hon. Friend the Member for The Wrekin (Mr. I. O. Thomas), in one of his familiar points of order, raised the question of the effect that this would have upon the interest rates of local authorities, the Chancellor of the Exchequer was not very forthcoming. It is perhaps as a result of that point of order that the increase has been cut down to one quarter of 1 per cent. this afternoon.
I hope that consideration will be given to keeping municipal rents as low as possible and freeing them from all the upward turns and trends, and that we adopt a system that tends to harmonise interest rates with housing subsidies on a more reasonable and sensible basis.

7.11 p.m.

Mr. Douglas Jay: It is clear that there are a good many questions to be answered, and anxieties to be allayed, by the Financial Secretary before we part with the Bill. I should like to ask a few more questions. We are discussing the Bill at an opportune time, because it was only last Thursday that the Chancellor of the Exchequer, after all his optimistic speeches about recovery, prosperity, and all the rest, flew into a panic and imposed the 1 per cent. rise in the Bank Rate, making a rise of 1½ per cent. in the last four weeks.
What effect will that have on local authority finance? The Chancellor himself said that it would depend on the structure of interest rates generally. That in itself is rather discouraging, for we have seen already, for instance, the Treasury Bill rate go to the extraordinary high level of 3¾ per cent. It has actually gone up by nearly 2¼ per cent. since November, when these movements began. Incidentally, on the outstanding£5,000 million or so of Treasury bills, that appears to represent, at an annual rate, an increase of£120 million a year of Government expenditure in the Budget. This in itself is a sign of what a curious and blunt instrument this high Bank Rate policy is.
What is to be the effect on local authority borrowing? That, I think, is our main anxiety today. The Labour Government kept the rate of interest on public works loans down to 3 per cent. for a long period, and gave to local authorities the stability for which the hon. Member for Kidderminster (Mr. Nabarro) was asking earlier. The present Government, at the beginning of their term of office, put up the Public Works Loan Board rate at one time actually to 4¼ per cent., and at a time when the Bank Rate was lower than it is at present. That would have meant a rise of about 5s. or even 10s. in council house rents, had the Government not in the end given way to pressure from this side of the House and agreed to make up the difference by means of the housing subsidy.
We have been told today by the Financial Secretary to the Treasury that the rate for public works loans of over 15 years is to go up from 3¾to 4 per cent., although for shorter period loans it is to go up by a good deal more. That is

grave and serious news for local authorities, and, so far as we yet know, for council house tenants.
I should like the Financial Secretary to tell us whether this rise in the Public Works Loan Board rate of interest will stop at 4 per cent. I see several reasons why, under the Government's present policy, it might well go higher. First, I understand that the yield on gilt-edged securities has risen by a good deal more than ¼ per cent. since this new spate of increases in the Bank Rate began. Can the hon. Gentleman give an assurance today that, at any rate in the present year, the Public Works Loan Board rate for loans of over 15 years will not go above 4 per cent.?
The Chancellor said that it would all depend on the behaviour of the gilt-edged market. He succeeded in producing a drop of four points in gilt-edged in one day last week, which is almost an all-time record, and which came rather oddly from a Chancellor who only a few months before had been advising the country to invest in success.
Even taking the rise at the ¼ per cent. figure which we have been given today, I wonder whether the Financial Secretary will confirm what has been said by a number of my hon. Friends who are experts on local authority finance, and housing finance in particular, that even this rise means an addition of 2s. or 2s. 6d. to council house rents. I was particularly struck by what was said by my hon. and learned Friend the Member for Crewe (Mr. Scholefield Allen) about the lamentable effect on rural housing. He said that in his area such an increase might even mean an inability to let new council houses—or, at any rate, some council houses—at all.
Our main anxiety is to hear from the Financial Secretary today whether this increase, so far as housing is concerned, will or will not be covered by an increase in the subsidy. It is all very well for the hon. Gentleman to say that we may hear this news from some other Minister tomorrow or next week, or at some other time if a certain Question is reached. That is not good enough. The House ought to be satisfied on this point before it gives a Second Reading to the Bill. If the difficulty is that the Financial Secretary thinks that it is not for him but for the Minister of Housing or the Secretary


of State for Scotland to give the answer, we should be perfectly content to hear it from those Ministers, and not from the hon. Gentleman, in the course of this debate if he prefers it that way. So far as I know, there is nothing to prevent those Ministers participating in the debate.
The Financial Secretary knows as well as I do that local government elections are on the way. Some of us, speaking on platforms in those elections, will be asked about the effect of these changes on local authority finance and on the rents of council houses in particular. If the Financial Secretary cannot give any assurance today, people are bound to think that this latest change in Government policy will mean higher rents, which come, do not let us forget, on top of rises in rents for private houses due to the Government's Housing Repairs and Rents Act; and on top, incidentally, of food prices at the highest level ever known in this country.
Nor will the effects end there. The Financial Secretary said that 24 per cent. of the loans are for purposes other than housing. Therefore, even if the subsidies for housing are raised, there will still, it seems, be an increased cost for local authorities on roads, schools, and other types of development. That, surely, must mean an increase in rates, as well as an increase in rents, as a result of this dear money policy.
Is the Financial Secretary satisfied that the figure of£1,000 million for the upper limit on advances plus commitments, which is introduced into the Bill instead of the previous higher figure of£1,200 million, is sufficient? In his speech, the hon. Gentleman gave as a reason for a reduction the change in procedure which, he thought, would mean that local authorities would not wish to borrow so much from the Public Works Loan Board. But I should like to know whether the decision to lower the figure to£1,000 million was taken before the decision to raise the Bank Rate, with all its consequences.
The Financial Memorandum to the Bill states that
On the assumption that the sums proposed will be supplemented by Local Authority borrowing from sources other than the Public Works Loan Commissioners… 
not so much will be available, or at least the time will not be so short. Does the Financial Secretary really think that in

present conditions local authorities will find it so easy to go to the City of London and obtain their finances in some other way than through the Public Works Loan Board?
I notice that the Bill was ordered to be printed on 16th February. That, of course, was some time before the change in the Bank Rate was announced to the House. Can we know whether the Financial Secretary, whose name is on the Bill, had been told about the Chancellor's in tentions at the time when he fixed the figure of£1,000 million? It looks rather as if somebody on the Stock Exchange knew about the Bank Rate change beforehand. We should like to know whether the Financial Secretary was favoured with that knowledge, as well as the Chancellor. If he was, ought he not to have had a larger figure in the Bill than£1,000 million?
I think that what my hon. Friends have said about the effects of the Bill, on housing in particular, and on roads and schools, illustrates what a blunt instrument this high Bank Rate is in its influence on economic policy. So far as local authority projects are concerned, I should like to know the answer to the question which my hon. Friend the Member for Stechford (Mr. Roy Jenkins) asked. Is it or is it not the Government's purpose, in imposing this higher interest rate on local authorities, to slow down housing, road, and school developments and other programmes of which we have heard in the last few weeks?
If the Government take no action to correct it, a mere policy of dear money falls on the just and the unjust alike. It falls on housing just as much as on building cinemas, and there is now, of course, no building licensing. It falls on schools as well as on luxury flats, on vital industrial development as well as on excessive stocking up by industry. It also falls on development plans for road and rail, of which we have heard so much in the last few weeks, as well as on unnecessary projects like the Government's flippant and extravagant project for commercial television.
Is it the intention of the Government that all that should happen? Is it intended that this curb should fall on the purchase of furniture by newly-married couples setting up house, as well as on


the purchase of less necessary things like television sets and cars, or whatever they may be? So far as we have been advised, this rise in the interest rate for public works loans will affect the whole of municipal activity.
We hope that the Financial Secretary will be able to answer some of these questions, and at least be able to assure us about the Government's intentions concerning the housing subsidy. If the hon. Gentleman cannot answer any of them, we are bound to conclude that the country is confronted with an arbitrary and indiscriminate dear money policy, which will cause a great deal of injustice to those who least deserve to be treated in this way.

7.25 p.m.

Mr. H. Brooke: I ask the leave of the House to reply to a debate of which I have heard every word, despite the earlier kind invitation of the right hon. Member for Colne Valley (Mr. Glenvil Hall) to go away and take some refreshment if the debate went on for too long. I have no complaint whatsoever about the manner in which the debate has been conducted and the interesting way in which various points have been made. I will endeavour to answer as many questions as possible.
I hope that I shall be in accord with the general feeling of the House if I replied to a number of specific questions arising from the Bill which were asked of me and then proceed to deal with the broader issue of interest rates in the second half of my speech. The right hon. Member for Colne Valley asked how much of the commitments of the Public Works Loan Board had been cancelled in the past year, that is, commitments entered into by by the Board but which the local authorities, for some reason or another, had not taken up. The figures up to 31st March, 1954, are given in the Board's latest Annual Report. Since that date, I understand that about£170 million of commitments have been cancelled on evidence that local authorities had no desire to take them up.
I should like to ask the right hon. Member for Battersea, South (Mr. Jay) to bear that figure in mind, because it will help me to answer his question about whether it will be sufficient if we fix the limit of actual advances plus commit-

ments at£1,000 million in future instead of at£1,200 million. I think that it will be, because we have not only had this amount of£170 million of commitments cancelled, but also, under the new procedure which I explained to the House, local authorities are not likely, in future, to approach the Board to ask for loans unless it is considerably more certain than it has been in the past that they will actually have to take them up. Therefore, on that ground, too, the amount of outstanding commitments is likely to shrink.
The right hon. Member for Colne Valley also asked about the fee charged by the Board and whether it remained at 4s. percent. It does. The right hon. Gentleman intimated that the fee seemed to him out of proportion to the costs incurred. I should like the House to know that this question of the size of the fee was fully discussed with the Standing Committee of the local authority associations in May last year.
The best thing that I can do is to quote one sentence from the Report which the Standing Committee gave to the constituent associations after the discussion. The Report said:
We think that the present charge of 4s. per cent. should be accepted as reasonable.
That is the view expressed by that Standing Committee. I think that it means that the Treasury was able to convince that committee that nobody was profiteering by charging that fee and that it was reasonable in relation to the costs involved.

Mr. Glenvil Hall: Surely the proof of the pudding is in the eating. Although it sounds reasonable, and we must obviously accept what the hon. Gentleman says, in fact the Board has made a profit of nearly£700,000 a year for some years. On that figure, the charge would not appear to be reasonable.

Mr. Brooke: I think that the right hon. Gentleman is considering only the expenditure that may fall upon the Board in examining applications for loans and so forth, and is omitting the cost of debt management in respect of money provided for the Local Loans Fund. If the right hon. Gentleman will look at the foot of page 10 of the last Annual Report, and will accept my assurance that full information has been given to the Standing


Committee of the local authority associations and that that committee is satisfied, I sincerely trust that, on consideration, he also will be satisfied.
The right hon. Gentleman asked about the present size of the Board's staff. It numbers 78, and is slightly smaller than it has been in the past. I am sure that all concerned will be grateful for the tribute which was paid by the hon. Member for Islington, East (Mr. E. Fletcher) to the excellence of that staff.
The right hon. Gentleman and the hon. Member for Clapham (Mr. Gibson) asked whether there could not be an opportunity for local authorities which have paid high rates to pay off the loan and borrow back on cheaper terms. I understood the hon. Member to say that they could do this if they borrowed on the open market. But that is not so if they have raised a long-term loan on the open market. They certainly cannot claim to pay it off before the earliest date of permitted redemption.
The position in relation to the Board is that premature repayment of loans is permitted. If the current rate of interest chargeable by the Board is lower than that charged on the loan to be repaid, the borrower must pay a premium on repayment to cover any loss which the Local Loans Fund would otherwise incur. In exceptional circumstances, premature repayment is accepted with partial or complete waiver of premium.
The right hon. Gentleman also inquired why there was no provision in this Bill, as there had been in some earlier Acts, for the writing off of bad debts, and he wanted to know if this indicated any change in Government policy. I can assure him there has been no change in policy. The Government are advised by the Public Works Loan Board that there is no need at present to write off any commitments as bad debts.
The Board's continuing policy is not to write off anything as a bad debt unless the borrower, if an individual, is dead, or, if a corporation of some kind, is in liquidation. The Board's attitude towards these longstanding debts is that while there is life there is hope, which is the fundamental reason why there is no provision in certain Measures for the writing off of bad debts.
I listened with great interest to my hon. Friend the Member for Edinburgh, South (Sir W. Darling). He feared that the behaviour of the Board was encouraging to profligate local authorities. My own view is that local authorities generally are not profligate. [Hon. Members: "Hear, hear."] I am sorry to disagree with my hon. Friend. I am not going to take any part in the enlivening quarrel between the hon. Member for Stechford (Mr. Roy Jenkins), my hon. Friend the Member for Edinburgh, South, and my hon. Friend the Member for Kidderminster (Mr. Nabarro). But I think I may say that the hon. Member for Stechford was stating the Government's attitude on some of these matters very well indeed.

Mr. Jay: Will the Financial Secretary say whether he agrees with the hon. Member for Edinburgh, South that the London County Council is a profligate authority.

Mr. Brooke: I was intending to make some comment on that remark and, being invited, I gladly do so. I am a member of the opposition on the London County Council, and when I am speaking from this Box on a Bill of this kind it would be quite improper for me to make comments for or against any local authority.

Sir W. Darling: This self-denying ordinance on the part of my hon. Friend does not, of course, proscribe me from making them.

Mr. Brooke: I doubt whether my hon. Friend knows what a self-denying ordinance is.
My hon. Friend the Member for Kidderminster asked me two questions. One concerned the rate of interest, which I will deal with in the latter part of my speech, and the other asked how much local authorities have borrowed each year in the open market since they had the right to do so. The position is that in each of the last two years, 1953 and 1954, since they obtained this power, the local authorities have borrowed about£20 million on the open market.
In addition local authority borrowing from trustee savings banks has been running at the rate of about£40 million a year. I cannot give any precise figure on the amount that local authorities raised by private mortgage. I should say it was


probably about£200 million a year and, as the House knows, local authorities are raising sums of about£300 million a year from the Public Works Loan Board.
The hon. Member for Clapham, I think, misunderstood something which I said about the amount that was likely to shrink. I did not suggest that the amount of loans made by the Board to local authorities was likely to shrink. I said that the amount of commitments not taken up by local authorities was likely to shrink for the reason which I explained earlier in my speech. I agree withhim—I do not always agree with him—that the Public Works Loan Board does meet a public need.
The hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) referred me to two previous speeches that he had delivered, indicating that the Board might very well go out of existence. I do not take that view, and I must leave this matter to the two hon. Members who represent neighbouring constituencies to fight it out between themselves, though I am with the Clapham side this time.
I suggest that one good reason for continuing our present practice is that it affords a periodical opportunity for a debate like this on local authority borrowing; because if there were no Public Works Loan Board there would be no need for a Bill of this kind. I can assure the House that there would be no perceptible economy by abolishing the Board, as all the members are unpaid and the staff would have to do that work inside the Treasury if they were not doing it for the Board.
The hon. Member for Newcastle-upon-Tyne, East(Mr. Blenkinsop) complained that there were not more Ministers present on the Treasury Bench. I think the Government must be left to conduct their own business in that respect. I do not know whether the hon. Member looked round when he was speaking, but at the moment when he was pleading for greater representation of Ministers I noted there were only eight of his hon. Friends present, so that I think we were not acting unreasonably in relation to the strength of the demand that was coming from the other side of the House.

Mr. Blenkinsop: I was merely referring to what had been the practice in some

previous debates, in which references were made by other Ministers to the way in which this particular Bill affected their Departments. It was not a question of how many Members of this side of the House were present.

Mr. Brooke: I do not know what the practice was under previous Governments, and it is not for me to say that my right hon. Friends trust me to look after the interests of the Government while that may not have been the case under earlier Administrations when the position of parties in this House was reversed.
The hon. and gallant Member for Brixton, who sent me an apology because he could not remain until the end of this debate, asked a number of technical questions which he read from a document. I hope that I shall be forgiven if I do not reply to them at length. I am prepared to do so if the House desires, but perhaps it will suffice for me to assure the House that since I had the pleasure of meeting local authority representatives in November on the matters to which the hon. and gallant Member drew attention, I have written a letter in reply to those local authorities, and, as the questions are somewhat technical, perhaps it would be best for them to be considered further at that level.
My hon. Friend the Member for Dumfries (Mr. N. Macpherson) pressed me to see whether I could give any further indication as to how long this Measure would last. It is impossible for me to do so. In my opening speech I said it would depend entirely on how rapidly and how heavily local authorities wished to borrow. I did not say how slowly or how lightly. I have conveyed no suggestion, nor have I any desire to convey the suggestion, that this Bill is a warning to local authorities not to pursue a borrowing policy.
It is impossible to foresee with certainty how long this Measure will last. All I can inform the House is that the 1953 Act sufficed for 16 months. Local authorities have very big projects on hand, and it might be that this£500 million will last for another 16 months, but it depends on events in the future which none of us can forecast.
Now I will come to what have been the prevailing subjects in almost every speech—the interest rates and the policy


underlying them. Suggestions were made by various hon. Gentlemen opposite that it was right to have no changes of rates, or hardly any changes of rates. I think there were two changes of rates during the period of the Labour Government. The right hon. Member for Colne Valley urged that higher interest rates should not be imposed on local authorities for longer than absolutely necessary. I agree.
There is no thought in my mind, or in the minds of the Government, that local authorities should be punished by having to pay a markedly higher rate of interest if they borrow through the Public Works Loan Board than if they borrow elsewhere. These new rates which come into force tomorrow are not fixed for all time. They can be altered in their turn if conditions indicate that that will be wise.
The hon. Gentleman the Member for Newcastle-upon-Tyne, East, said that interest rates are higher than they have been for years. I must correct him. The top rate which I announced today was 4 per cent., whereas 18 months ago the rate at which local authorities could borrow on long-term from the Public Works Loan Board was 4¼ per cent. The hon. Member for Kidderminster spoke of jerking or hiccoughing the rate about.

Mr. Nabarro: What I said was "hiccups and gyrations."

Mr. Brooke: I am not quite sure how the rate can gyrate but I see how it can be jerked about.

Mr. M. Follick: The hon. Member for Kidderminster (Mr. Nabarro) had better keep to smog as a topic.

Mr. Brooke: I am not an authority on hiccups.
The Government view on this matter remains as it was previously expressed by no less an authority than the late Sir Stafford Cripps, that the rates of interest charged to local authorities are fixed from time to time to correspond broadly with the Government's borrowing rates for comparable periods. That is what Sir Stafford Cripps said in the House on 20th January, 1948, and there has been no marked departure from that general policy since.
It would be right for me to give a short explanation of the reason why a sharp change in Bank Rate may lead to only a

small change, or even no change at all, in the rate charged for loans from the Public Works Loan Board. The House will be aware that all kinds of short-term rates are closely linked to the Bank Rate, but in the case of long-term rates the link is far less direct, and many other factors come into play. For one thing, the money for long-term investment comes from quite different sources. In fixing the rate of interest to be charged on loans from the Board, the policy of the Government has been, and still is, to give local authorities the benefit of Government credit for loans of comparable period. The majority of local loans are made for periods of more than15 years, most of them for very much longer. For instance, housing loans are generally for 60 years.
What, therefore, is relevant in determining the rate of interest for such loans is the general level of gilt-edged rates for long-term loans. The Bank Rate is only one of the factors affecting that. The rates for the Public Works Loan Board loans for shorter periods are determined on similar principles. If hon. and right hon. Gentlemen will examine the course of markets since the change in Bank Rate, they will find that there has been nothing like a change of 1 per cent. in the yield on long-term Government securities. The yield on those at this moment is pretty close to 4 per cent. and that is how it comes about that the Chancellor has selected 4 per cent. as the rate for longer-term loans from the Board.
Similarly, the rates which have been selected for the short and medium-term loans are arrived at by consideration of the level at which the yield on Government stocks of those lengths seem likely to be settling down. However, nobody can say whether these new rates of interest will remain permanently. The general principle is that the rates at which the Board will lend should be related to the market yields on Government securities of similar length.
The suggestion has been made in this debate, not explicitly, but it has been implicit in a number of the speeches, that local authorities should be insulated from the market, that Parliament should fix a ceiling above which the rates of interest charged to local authorities should never go.

Mr. Pannell: I think that the hon. Gentleman is overstating the case. We do


not say there is a point beyond which interest rates shall not go, but that for a given time ahead interest rates to local authorities should be predictable.

Mr. Brooke: There have been suggestions that the Public Works Loan Board rates should be, to some extent, insulated from the market.
I understand what the hon. Gentleman has said about their being predictable, but clearly it is impossible to make predictions far ahead if the principle is to be adopted which I have described, that the rates should be kept in line with market yields. I can give immediate proof that changes do not follow instantly on Bank Rate changes, because it is some weeks now since Bank Rate was put up from 3 to 3½per cent., and not until today has there been any change in the Public Works Loan Board rates. If Parliament were to fix any kind of ceiling it would tilt the balance in favour of local authorities borrowing from the Board and not borrowing in the market, because they could get more attractive terms from the Board.
The policy of this Government is to encourage the authorities to use their freedom to borrow in the market on their own credit, and it would be interposing an artificial restriction if the rate at which they could borrow from the Board were to stay firm when the rates charged in the open market were considerably higher. My hon. Friend the Member for Kidderminster perhaps did not allow sufficiently for that possibility in his plea for uniformity of rate. He took the example of what might happen when the market rate went down, but he did not follow that up, as I hoped he would, by analysing the situation if the market rate went up.

Mr. Nabarro: The analogy that I drew was a very simple one. An announcement was made last Friday by the chairman of one of the largest building societies to the effect that it would not alter its mortgage interest rates as a result of the change in the Bank Rate. If that applies to a building society, which rests its terms on general market conditions, why should it not equally apply in broad principle to the operations of the Board?

Mr. Brooke: The answer is that running a building society and lending money to local authorities are not precisely similar operations.
It really would be unsound public finance in my opinion, and, I should have thought, in my hon. Friend's opinion, to lend to local authorities below the market rate and thus give them a concealed subsidy. It strikes me that the right basis for the financial relationship between central and local government is that the system of Exchequer grants and subsidies should be clearly laid down by Parliament, and that it should not get warped this way or that by concealed subsidies to local authorities through the rate of interest.
A fluctuating Bank Rate does not imply constant changes in the rate of interest for Public Works Loan Board loans. That is by no means a necessity. I have explained that there is no direct connection between the Bank Rate and gilt-edged rates, and that has been seen very clearly in the last six weeks. The rate for Public Works Loan Board loans must now move to 4 per cent. or it will clearly be out of line with the market, but we are proceeding on the following principles.
We have a flexible monetary policy, and that means a flexible money market. We do not intend to give financial favour to the local authorities at the Exchequer's expense by insulating them from the movement of the market. If the cost of long-term borrowing goes up, they must expect to pay more. If it goes down, they can expect to pay less, whatever source of capital they use.
On the other hand, the Government are fully seized of the point that rapid fluctuations in the Public Works Loan Board rates would be unsettling to everybody; it would introduce inconvenience and uncertainty. No undertakings can be given to limit the freedom of the Treasury in the future to change the rate either way whenever a change is necessary to keep the rate in line with the general level of the gilt-edged market, but it is not the intention of the Government to make frequent and detailed adjustments in the rate as if it were directly linked with any specific rate in the gilt-edged market.
The hon. Member for Stechford asked whether the new rates which I announced today marked a deliberate policy of influencing local government borrowing. No, that is not the case. The Chancellor of the Exchequer, when he reached his decision about the Bank Rate last week, was not saying to himself "This is the


instrument that comes to my hand for restricting local government borrowing." What has happened today is, in a sense, consequential upon what he felt it was necessary to do in the national interest about the Bank Rate, but it was not in itself a leading consideration in his mind.
I have been asked what will be the effect on railway, road, and housing policy and, indeed, on all kinds of local authority borrowing, or on the financial relationship between local and central Government. I am not in a position to say precisely what effect these new rates will have on the minds of local authorities. It will be for my colleagues in the Government to consider the matter and inform the House in due course whether or not they think that any changes in existing arrangements are necessary.
I must remind the House, and especially hon. Members opposite, that the enormous rise in the costs of house building between 1945 and 1951 did not induce the Labour Government to increase the housing subsidies at all. The rents of council houses do not depend only on the rate at which the local authority can borrow; they depend even more on the cost of building houses. Certainly, local authorities were entitled to have a much greater grievance before the Labour Government fell in that the Labour Government did not increase the rate of housing subsidy than any local authority can have at the present moment in that the rate of interest is going up by ¼ per cent.

Mr. Jay: Is the hon. Gentleman not going to make any statement at all about the housing subsidy? Will it cover the increase in the rate of interest?

Mr. Brooke: No, I am not going to make any statement today.
The rates that I have announced today are not laid down for any definite term. Indeed, the Chancellor's remarks last Thursday indicated that he would be continuing to watch the position, and we must do that, and we must see whether it remains necessary to keep the rates where they are or whether it is necessary to change them, either up or down. It would be quite unsuitable for an announcement of a permanent nature to be made at the very moment when a new and relatively small change has been made in the rate of borrowing which mostly affects local authority loans.

Mr. Jay: The Financial Secretary told us earlier that some other Minister would be answering a Question tomorrow or later this week. Does he know what the answer will be? If so, why should he not tell us now?

Mr. Brooke: It really is not for the right hon. Gentleman to tell this Government how to manage their business. I am certain that in his time as a Minister he did not anticipate answers to Questions which were to be put to his senior colleagues later in the week.

Mr. Gibson: The hon. Gentleman spoke about the cost of building being an important influence upon the rate of rent. That is true, but surely he will agree that by far the greatest proportion of the rent paid each week is the result of debt charges and interest payments, which amount to about 15s. in the pound?

Mr. Brooke: The amount of the debt charge depends not only on the rate of interest but also on the amount of the loan that has to be raised.
As to the announcement of the new rates of interest, it was in the Chancellor's mind that this debate would be taking place today. He thought that it was right that the new rates should be announced at the beginning of the debate and that I should be empowered to announce them, because that seemed to be the fairer way of treating the House. It would have been possible to hold them over for a bit. His statement last Thursday did not tie him to any date, but I hope that the House will feel that it has been fairly and reasonably treated by the announcement's having been made at the earliest possible moment so that there could be no suggestion of a Second Reading being given to the Bill while something of an essential nature was being kept back.

Mr. Glenvil Hall: We heartily agree that it has been courteous of the hon. Gentleman to tell us just what change was about to be made in the rate. But would it not be equally courteous, as the two hang together, to let us know what change, if any, is to be made in the subsidy? We should then have the whole picture and we should know whether we ought to worry or not.

Mr. Brooke: Those are very much wider issues. This debate is not concerned with the whole field of local


authority finance. We are not debating Exchequer grants, but the rates at which local authorities can raise money.
The hon. Member for Kilmarnock (Mr. Ross) suggested that these new rates would deter local authorities. Looking backwards it is quite impossible to see any close connection between changes in the rate of interest and amounts which local authorities have borrowed. Certainly they have not been deterred in the past, and there is no reason to think that this Bill will have some sudden and devastating effect which past changes in the rate have not had.
On the contrary, I should say that local authorities have greatly appreciated the greater smoothness of treatment which they have very widely enjoyed during the lifetime of this Government. They have been saved from the sudden starts and stops which were so familiar and characteristic of the attitude of the Labour Government towards local authorities. In fact, local authorities have been left with great freedom to get on with their job.
I was asked whether the concession to local authorities to borrow for less than the full period of the loan sanction was not being offset by the rise in the short-term rates of interest. Let me explain that the rise in short-term interest rates is not necessarily permanent, whereas the concession is permanent. There is no question of making it today and withdrawing it tomorrow should the rate of interest change. Perhaps I should more fully explain the nature of the concession.
Local authorities for some time back have jibbed against the rule that the Board would approve loans covering only the full period for which the authority had been granted loan sanction by the responsible Government Department. As a result of discussion, it emerged that there were two types of situation that might arise. One was where a shortening of the period of the loan by imposing a larger charge, though for a shorter period, might affect the rate of grant receivable

by the local authority from the Government Department. That was the difficult case.
The Treasury had already accepted that where that did not arise, and the amount of the Exchequer grant was not involved, the freedom which the local authorities desired could be conceded. What I am announcing today is that the Treasury has now gone the whole hog, and even where a case of borrowing for a shorter period might affect the amount of Exchequer grant that would be earned by the local authority, nevertheless, the local authority will not be debarred from borrowing for less than the full period of the loan.
My hon. Friend the Member for Dumfries asked me to explain why the changes in short-term rates were not precisely the same as those in the long-term rates. I hope that I have made that clear, and set out the reasons why these three rates may change by different amounts, according to the market rates for Government securities of different dates.
I have endeavoured to cover most of the points that have been raised, I should like, in conclusion, to say that the Public Works Loan Board is even more ancient than was suggested. It was indicated that we might be wishing it "Many happy returns" on its 80th birthday. It is true that, in the main, the Commissioners operate under the Act of 1875, but Commissioners were first appointed under the Public Works Loans Act, 1817, and were then established to lend money to public and private borrowers for public works so as to relieve distress caused during the Napoleonic Wars. We have travelled a long way since then, and I hope that we are still carrying on properly and appropriately the machinery through which local authorities can borrow money from official sources.

Question put and agreed to.

Bill accordingly read a Second time.

Committed to a Committee of the whole House.—[Colonel J. H. Harrison.]Committee Tomorrow.

NORTHERN IRELAND [MONEY]

Resolution reported,
That, for the purposes of any Act of the present Session to make further provision as to the salary and expenses of the Governor of Northern Ireland, it is expedient to authorise the payment to the said Governor out of the Consolidated Fund of—

(a) a salary at the rate of four thousand pounds per annum; and
(b) an allowance in respect of expenses of an amount not exceeding ten thousand pounds per annum.

Resolution agreed to.

NORTHERN IRELAND BILL

Considered in Committee.

[Sir RHYS HOPKIN MORRIS in the Chair]

Clause 1.—(SALARY AND EXPENSES OF GOVERNOR.)

8.8 p.m.

Mr. Cahir Healy: I beg to move, in page 2, line 1, to leave out "ten" and insert "four."
This Amendment would limit the amount of the expenses to be allowed to the Governor from£10,000 to£4,000. My colleagues and I think that that is ample for his needs. There are now many suitable applicants in Northern Ireland and outside who would like to discharge these duties at the salary and expenses at present allowed. The duties are merely of a nominal character, and we know many public people and people in the professions who would discharge the duties pertaining to this office with credit, if not with distinction.
If£1,000 had been asked, in view of the circumstances of the time, I might have seen a good deal more reason, but that there should be a jump from£8,000 to£14,000 evidently shows that the Northern Ireland Government have reserved this vote for some favourite of theirs. The Northern Ireland Government call the tune, but the Treasury here pays the piper. It is said by some of our friends that we ought not to oppose this increase for the reason that, since the Exchequer here pays, it is only logical and reasonable that the Government here ought to be made to pay a penalty for imposing partition on Ireland, and therefore we should not oppose it.
That argument would appeal to me if we were not part of the general taxpayers of Great Britain and Northern Ireland. It strikes me as being unfair that we who were opposed to partition should now be taxed to pay for it. That is the position. There is no reason why somebody who protested against partition should be made to pay for partition. That is why my colleague and I oppose the increase.
Already the Northern Ireland Government have succeeded in reducing their liability for the salary from£5,000, arranged under the 1920 Act, to the£2,000 which they pay now. Now they want to get rid of it altogether and place the burden on somebody else's shoulders. It is remarkable that we have not had any demand for an increase until a gentleman from this country filled the position. For a quarter of a century the Duke of Abercorn occupied the post as Governor of Northern Ireland, and he lived all that time in the Six Counties.
I saw it reported the other day that Lord Wakehurst attended a function in Strabane. An address was presented to him. It was mainly concerned with protests against the high rate of unemployment. He confided to the deputation——

The Deputy-Chairman: I do not think that it is in order on this Amendment to discuss petitions and unemployment. The Amendment is merely to reduce the expenses.

Mr. Healy: I am coming to that. The petition was presented to him and he confided that he had been in Strabane incognito a little while ago; and the problem now arises, in what form did he appear in Strabane.

The Deputy-Chairman: It is not in order to discuss that, in whatever form he appeared in Strabane.

Dr. H. Morgan: Strabane is banned.

Mr. Healy: I want to show that the previous holder of the office, at a salary of£8,000 a year, discharged his duties with efficiency and to the satisfaction of everybody concerned. I hope that that will be considered relevant. He went about, as I suppose a Governor should, opening parish bazaars and Orange halls. In Northern Ireland it is part of the duties


of the Governor to open Orange halls. He would not be kept long in the post if he did not.

Lieut.-Colonel H. M. Hyde: I think that it is true to say that none of the three Governors of Northern Ireland has ever opened an Orange hall.

The Deputy-Chairman: I hope that no one on either side of the Committee will attempt to get out of order.

Mr. Healy: I am certain that the Duke of Abercorn, who was the leader of the Tories in Northern Ireland, opened many Orange halls.

Lieut.-Colonel Hyde: Not when he was Governor.

The Deputy-Chairman: I hope that hon. Members will direct their minds to the Amendment, which is to reduce the amount allowed for expenses and has nothing to do with whether halls are opened for one colour or another.

Mr. Hugh Delargy: Surely, if in the course of his duties the Governor has to open Orange halls and the expenses are met by this country, it is in order to discuss how he spends those expenses?

8.15 p.m.

The Deputy-Chairman: It cannot be in order to discuss that on this Amendment, which is concerned only with the amount the Governor should be allowed.

Mr. Delargy: If he opens fewer Orange halls, he will spend less money.

The Deputy-Chairman: Discussion about the nature of any halls opened cannot be in order on this Amendment.

Mr. Healy: The salary the Governor had for that quarter of a century was£8,000. I am certain that on that salary he was able to go around doing all the ordinary duties, as well as opening Orange halls. He was the leader of the Tories for all that time. He also got the credit for bringing a number of industries to Northern Ireland. I am sure that he did his best. The name of the Duke of Abercorn was such that it might appeal to many industrialists across here. There was nothing Socialist or Nationalist about him. He was able to assure the people here that the workers of Northern Ireland would not make any trouble over wages or hours.
He never asked for an increase in the 25 years during which he filled the post. He entertained, he dined, he wined, he did everything pertaining to his office, and I never heard anything but praise of his social qualities. He was paid for the whole period, and when he died I never heard that he was in debt through serving in that post.
He was followed by Earl Granville. He made no complaint about the salary or expenses. He did not over-stay his welcome, and he cleared out of Northern Ireland when his period of office expired. The present holder, Lord Wakehurst, has come on the scene, and he makes a demand, not for an additional£1,000, but for an increase of 80 per cent. He knew what the salary and emoluments were when he was offered the position. Why should he have accepted if they were not sufficient.
The size of the territory has not increased, and I am sure that his duties have not been added to. Lord Craigavon coined a phrase, "Not an inch" in relation to the Boundary Commission. Bearing in mind his old friend the Duke of Abercorn who was paid£8,000 for 25 years, he would have said to Lord Wakehurst, "Not a penny." In my opinion, and in that of the people of Northern Ireland, he is not worth an increase of£6,000.
In addition, we are saving him probably another£1,000 in Income Tax, because the£8,000 hitherto received was by way of salary and allowances. The salary is to be reduced to£4,000, obviously to reduce the Income Tax, but the allowances, on which no tax will be paid, are to be increased to£10,000.
Is Northern Ireland more important to the British Empire than Canada, New Zealand or Australia? Northern Ireland has a population only equal to that of Glasgow or Birmingham, and I believe that the Lord Mayor of Glasgow receives no salary. The Viceregal Lodge is situated in the wilds, miles from anywhere, and nobody ever goes there except Parliamentary Secretaries and gentlemen seeking jobs.
This is a most inopportune time at which to increase the salary of anybody in Northern Ireland, especially of one at the head of the administration. About a thousand people have been put off from work in the shipyards of Belfast. We are reducing the subsidy on housing and the


amount allocated for hospitals. Our National Assistance is being reduced in some cases to 15s. for an individual. When in so many matters we are being so stringent, is this the time to increase the salary of the head of affairs by£6,000, or 80 per cent.?
The dwelling of the Governor is costing the taxpayers of Northern Ireland£23,000. That is for one household and one man. Of that sum,£9,000 goes to the Board of Trade for various duties, such as heating, lighting and cleaning the building. The rest goes by way of expenses and salaries. It is one of the most expensive luxuries in Northern Ireland, next in fact to the gentlemen who look after the Prime Minister. His chauffeur receives£1,000 a year.
I see some hon. Members opposite who represent constituencies in Northern Ireland, and I have no doubt that we shall be hearing from them. I should like therefore to ask this question of them. There are 2,000 branches of the Ulster Farmers' Union and hundreds of branches of the Unionist Party in Northern Ireland. Have they received one resolution from all these bodies asking that the salary of the Governor be increased? It is no use talking round the subject. I want them to put their finger on that, because it seems to me to be the vital point. There are 70 public bodies in Northern Ireland, including corporations, urban councils, borough councils and rural councils. Has a single resolution been received from one of those bodies asking hon. Members opposite to support an increase in the Governor's salary?
On the contrary, many of these public bodies believe that in a small community like Northern Ireland, with a population equal to that of Glasgow, the Governor is already too highly paid—and so is the Prime Minister and the whole set-up. In fact, they are of opinion that this country's Exchequer must have money to burn when the suggestion is made here that the salary should be increased to this extent. If we have money to burn, there are a lot of people in Northern Ireland who would like to sit by the fire and warm their hands at the flames—particularly in this cold weather. I believe this to be in the nature of a bribe to make partition and the positions connected with it more attractive than they are at the moment. But notwithstanding this proposed increase and this subtle bribe, I believe that

there is no Irishman in Northern Ireland worthy of his name who would accept the offer.
The Government of Ireland Act presupposes that Northern Ireland pays an Imperial contribution of£8 million. On balance, Northern Ireland pays nothing whatever. If we take into account the various Departmental and other grants for the social services, and for agriculture and other things, I believe that we are driving a coach and four through the 1920 Act by all these subventions and grants, and not the least by this one. In those circumstances, my colleagues and I hope that the grant will not become operative.

Professor Sir Douglas Savory: We discussed this question almost ad nauseam on Second Reading, when all the arguments we have heard tonight were fully answered.
What the hon. Member for Fermanagh and South Tyrone (Mr. Healy) has said about the Duke of Abercorn was answered during the Second Reading debate, when I pointed out that, especially during the latter part of his governorship, the Duke of Abercorn was out of pocket by thousands of pounds. His successor, Earl Granville, made a formal complaint to the Government that it was impossible for him to carry on because he was being absolutely ruined by the immense charges he had to undergo. Is it not therefore natural that the present Governor, in presenting his accounts, should have appealed to the Government that it was impossible for him to make ends meet?
What the hon. Member has said is entirely contrary to the facts, all of which were set out very fully and in detail during the Second Reading debate. The hon. Member brought up the point, to which I replied on that occasion, regarding the contribution formerly made by the Government of Northern Ireland and which amounted to£2,000. I explained, and the Minister fully agreed with me, that as the Government of Northern Ireland were taking over the secretarial and office expenses, that would be roughly equivalent to the£2,000 which they had already been paying.
On Second Reading, I gave the various comparable salaries earned by the Governors of New South Wales, New Zealand, the Isle of Man and so on, showing that this increase was altogether


reasonable. As the Governor of Northern Ireland represents Her Majesty, I think that we are entitled to compare what it is proposed to grant to him for expenses with the expenses given to our ambassadors abroad. I should like the Committee to consider some relevant figures. The Ambassador to Sweden receives£8,000 for his expenses; the Ambassador to Poland gets£14,450; the Ambassador to Austria receives an allowance of£11,460; the Ambassador to Belgium receives£11,200; the Ambassador to France receives£22,390—not subject to Income Tax—and the Ambassador to Italy receives£10,370. In view of those figures and the fact that they have not to be accounted for, whereas the Governor of Northern Ireland has to prove that his expenses amount to a certain sum, up to a maximum of£10,000—and this amount is doubly checked——

Dr. H. Morgan: Is this in order, Sir Rhys? I do not think that it has any relevance to the discussion.

The Deputy-Chairman: It is quite in order. The hon. Member is arguing that the sum is justified.

8.30 p.m.

Sir D. Savory: I was arguing that there is a difference between the money paid to our Ambassadors for their expenses and the money paid to the Governor of Northern Ireland. The Ambassadors do not have to account for their expenses, but those of the Governor of Northern Ireland are checked twice—once by the Home Secretary and again by the Treasury. If his expenses do not amount to£10,000 he does not receive the excess. These expenses are public expenses. All private expenses have to be paid for by the Governor himself.
The hon. Member for Fermanagh and South Tyrone challenged other Ulster Members as well as myself to cite any local body or authority which had demanded an increase in the Governor's salary. The answer is obvious; it is not their business. Why should a county council put forward such a resolution? It would be entirely out of order for it to do so. The proper people to put forward this demand are the Government of Northern Ireland, because they know the extent of the Governor's expenses. I am sure, however, that the overwhelming

majority of county councils and other authorities in Northern Ireland will approve of this expenditure, because the present Governor has shown himself worthy of his office.
He has undertaken every possible kind of public function. He has presided at prize-givings and has visited the towns of Northern Ireland. The hon. Member mentioned his visit to Strabane. The Governor has also made a tour of important towns like Carrickfergus. I feel sure that the Committee would think it dishonourable to ask that the Governor should continue to go on losing thousands of pounds a year simply because he is honestly trying to discharge the duties of Her Majesty's Goverment's representative.

Mr. Emrys Hughes: We have heard two speeches by Members representing Northern Ireland constituencies, but I think that we are all interested in this matter. We are here concerned with part of the expenditure of the United Kingdom. I represent a Scottish constituency, and I sometimes have the pleasure of looking over Northern Ireland. We do not begrudge them their internal controversies, but when they ask for money from us we are entitled to be told exactly what the money is for, and the justification for any increase in expenditure.
I am sure that the Chancellor of the Exchequer will be shocked when he reads the speech which has just been made by the hon. Member for Antrim, South (Sir D.Savory). Last Thursday the Chancellor told us about our serious economic condition, and mentioned the need for restraint and for considering our expenditure. Our situation is so bad that we even have to restrict the hire purchase of perambulators. Is this the time to set an example of reckless expenditure upon what seems to me to be an unnecessary luxury?
The hon. Member for Antrim, South (Sir D. Savory) has compared the position of the Governor with that of the ambassadors to France, Poland, and other European countries, but I regard the Governorship of Northern Ireland as a tinpot, ridiculous job, which could easily be done for a much lower salary. The Prime Minister has repeatedly been asked when he is going to increase the salaries of junior Ministers. His reply always has been, "Well, this is not an urgent matter."


I am quite sure that the junior Minister representing the Home Office, who is sitting on the Government Front Bench this evening, does far more work than the Governor of Northern Ireland.
I have listened carefully to the debate to try to find out what the Governor does. I have been able to find out what the Governor does not do—that he does not open the Orange lodges. If he does not open the Orange lodges in Northern Ireland, what on earth does he do? If the financial situation in this country is really as bad as the Chancellor has made out, this is the time for restraint. This is the time to stop expenditure on unnecessary administrative luxuries.
I do not see why the Governor of Northern Ireland should receive anything at all. I think that any one of the hon. Members who represent Northern Ireland constituencies could do all that is necessary in that particular job, and could do it in a very short time. I think that it is entirely off the mark to compare the Governorship of Northern Ireland with that of New Zealand or of New South Wales. After all, one can get to Northern Ireland in a couple of hours by train from London to Belfast, and all the really essential duties necessary in Northern Ireland can be done in a couple of days.
I was quite unaware, until I heard so this afternoon, that the sum of£8,000 is allotted by the Treasury to the Governor of Northern Ireland. I suggest that those hon. Members who represent Northern Ireland constituencies do far more work than the Governor of Northern Ireland. It is ridiculous to ask for a functionary of this kind this extravagant sum. I suggest that this is a job that should have been undertaken in connection with the Civil List. I think that one of our Royal Family could very well go to Belfast, in a couple of hours, for two or three days a year, and do the job without any increase in expenditure at all. I am sure that the Duke of Gloucester or the Duke of Windsor would be quite pleased to do that out of affection for and loyalty to Northern Ireland.
This is a time when the Government should set an example in economy. I appeal to the Minister to withdraw the Bill. There is no demand for it. There have been public meetings recently in Northern Ireland, but not to demand an increase of salary for the Governor. They

have been organised for the purpose of calling attention to unemployment. I shall not go into that matter, but I suggest that if the Government are serious in facing the economic position of the country at the present time they should set an example of austerity to the nation and withdraw the Bill.

Lieut.-Colonel H. M. Hyde: The hon. Member for South Ayrshire (Mr. Emrys Hughes) has told us that he does not know what the Governor of Northern Ireland does, and he also told us that he thought that some of my hon. Friends who represent Northern Ireland constituencies could do the job equally well. He pointed out that it was not necessary to have a Governor, and he proposed that the Duke of Gloucester should visit Northern Ireland from time to time to do what he could. May I say that we are very devoted to the Duke of Gloucester, one of whose titles is that of Earl of Ulster, and we are always extremely pleased to see His Royal Highness.
I think, however, that the hon. Member has missed the point, because under the Government of Ireland Act, 1920, the province of Ulster was given a local Parliament for local affairs and a Governor.
It is only fair to say—or to repeat, because this point was made during the Second Reading debate—that the Unionist Members who represented Irish constituencies in this House did not oppose the Government of Ireland Act, but they did not vote for it. The Unionist Members wished to remain under the jurisdiction of this honourable House and of Westminster. We did not want a Governor-General at all, or a local Parliament. As part of the compromise to settle the age-old Irish question, we accepted that arrangement, which was embodied in the Government of Ireland Act. We undertook, as Lord Carson, our leader at that time indicated, to work that Act loyally.
After 32 years, I think we can say that we have worked the Act loyally. This House, having decided that we should have a local Parliament for local affairs and a Governor-General and having voted money for that purpose, should maintain the Governor-General as the representative of Her Majesty in such a condition that he can discharge the functions which fall to him as Her Majesty's representative.
The hon. Member for Fermanagh and South Tyrone (Mr. Healy) doubted whether the Governor had been out of pocket as had been represented because he knew nothing about it. I certainly knew of my own personal knowledge, because I had the friendship of the late Duke of Abercorn, that he was substantially out of pocket. He put his hand into his own pocket to pay the expenses, and he was too decent a man to make a protest at that time. He carried on for the best part of 15 years.
It is only by hearsay that I know that subsequent Governors-General have been out of pocket. Certainly the first Governor-General was considerably out of pocket. The only point I am making is the very simple one that this House, having given us a Governor-General, should maintain him in such a way that he can discharge his duties as the Queen's representative adequately and efficiently.

Mr. Michael O'Neill: The argument in favour of this increase of£10,000 is that previous Governors indicated that they had been extensively out of pocket. In listening to the hon. Member for Antrim, South (Sir D. Savory) I gathered that that was the only real point which he made in support of the increase.
He mentioned that Lord Granville, who was the present Governor's predecessor, made no secret of the fact that he had informed the Government that he was extensively out of pocket. We may presume from that, that the Government were well aware, previous to appointing the present Governor, that he could accept this office only at a sacrifice. I wonder what he was told. Was he told when this appointment was made that he was going to be extensively out of pocket? If he was, did he accept it on those terms, or did he accept it with the suggestion that if he had it for a year or two—he has had it now for two years—his expenses would be increased?
If one of the professed political aims of the Tory Party is economy in every branch of administration, why do not they say to the Governor, "You are taking on this job, you will be out of pocket, and our suggestion to you is that you should economise and bring your expenses down to the limit of the present expenditure?" That would seem to me

to be more in keeping with the professed policy of the Tory Party than the proposal outlined in this Bill. Apparently, however, the Tory Party does not seem to practice what it preaches, at least as far as Northern Ireland is concerned.

8.45 p.m.

There is another point of some significance. This£10,000 is to be devoted to expenses, and I understand that it will be absolutely free of Income Tax. That is a substantial relief to anybody in these days of very high rates of Income Tax.

Lieut.-Colonel Hyde: It is not true to say that the£10,000 is free of Income Tax. The claim for expenses has to be submitted to the Treasury in accordance with the usual procedure.

Mr. O'Neill: No; I think my interpretation of the reply which the Minister gave on Second Reading was that this£10,000 would not be subject to Income Tax, and that only the£4,000 salary would be subject to Income Tax in the ordinary way. I understand that this£10,000 is to be solely for expenses, and that it will not in any manner be subject to Income Tax.
Here again, the Government have set a very unfair precedent, because I know for a fact that certain professional bodies, such as schoolteachers and doctors, have made representations to the Treasury to the effect that certain expenses in connection with their duties should be taken into consideration for the purpose of Income Tax allowances. The Treasury has refused point blank to accept those representations on the grounds of principle. Apparently, a question of principle is involved here—the principle that a salaried official cannot claim for expenses incurred in connection with his job—but here we have the Governor being allocated the vast sum of£10,000, which is to be free of Income Tax, and that, I think, is totally unfair.
Another difficulty which I can foresee is the way in which these expenses are to be determined. What part of the functions of the Governor will rank as expenses? It has been mentioned here that he may open an Orange hall. Well, if the Governor opens an Orange hall, will that be included in his expenses?

Sir D. Savory: He never has done, and never will open an Orange hall.

Mr. O'Neill: We are assuming that he will open Orange lodges.

Sir D. Savory: No, never.

Mr. O'Neill: The Governor may take a trip to America, and we know perfectly well that, if he goes to America, it will be a propaganda trip in support of the Tory Party in the Six Counties. Will that sort of expenditure rank for recoupment out of the£10,000? If so, we think it is very unfair.
Another difficulty will be to determine the expenses of the household at Hills-borough which will rank as official expenses, as against the personal and family expenses of the Governor. The Home Secretary has explained to us that the Governor would be expected to make a contribution for his personal and family expenses and for his personal guests. I should like to know who will determine who, at a certain period, are the State guests in the Governor's house and who the personal guests, which wine will be paid for by the State and which paid for by the Governor. All that kind of difficulty will crop up, and I think that we are setting a very unfair precedent. The scope of this proposal is far too wide, and it will leave the office open to abuses—and it is being very seriously abused.
We must also consider that in addition to the£10,000, Parliament here is undertaking responsibility for the heating, lighting, fuel, equipment, furniture, staff salaries, and a chauffeur and an official car for Hillsborough. This will be met from a separate Vote, apart from the£10,000, from the Public Buildings Account, and is expected to amount to a further£9,000, making the total expenses of the Governor£23,000 a year.
That is out of all proportion to the services which the Governor of Northern Ireland offers this country. The total population of the area is equivalent only to that of Birmingham or Glasgow, and I think that this Parliament would be very dilatory in voting£23,000 for a lord mayor of Glasgow or Birmingham. Therefore, it is entirely out of reason to vote this ridiculous sum of£10,000 for expenses.
We should also consider whether the duties of the Governor merit the spending of this considerable amount of money; in other words, whether there is appreciation in Northern Ireland to the people

here for their generosity. The hon. Member for South Ayrshire (Mr. Emrys Hughes) has inquired what the duties of the Governor are. I know of only one of his functions. His main function, I think, is to sign Bills which bring nothing but mockery to the democratic institutions of this country. The Bills and the different Orders that the Governor is called upon to sign do nothing but discredit this country in the eyes of the world. And that is the Governor's principal function.
It is very significant from every Irishman's point of view—and it should not be something for a Member from Ireland to have to raise in this House—that ever since partition was established by the 1920 Act, the principal Irish Measures to be brought before this House have been financial Measures, each and every one of which has had the sole objective of giving financial relief to the Six Counties of Northern Ireland. Each and every Measure from 1920 to the present day has formed one long succession of financial reliefs. In other words, this Government here continues to subsidise partition in the Six Counties.
It is made more and more impossible for Irish people to come together and resolve their grievances so long as Parliament here votes these vast sums to interfere—for it is interference—in Irish affairs, and to consolidate the one political party in that one area of Ireland. It is being made physically impossible for the Irish question to become resolved. Therefore, I think that the people in this country will get no appreciation whatever from the Irish people for putting their hands in their pockets to this extent.
The duties of the Governor, as we see them, are merely that he continues to represent the over lordship of Britain over that part of Ireland which is called the six counties of Northern Ireland. No matter what money this Parliament spends on the Governor's office, no matter how much it is prepared to vote from this country, we shall never look upon it in any other light. The time has come when this country should consider seriously the whole question of leaving the Irish people to determine their own affairs among themselves.

Mr. Delargy: I donot wish to imply any criticism of the Chair, but I remind you, Sir Charles, that so far we have had five speeches, four of which have been


delivered by hon. Members representing Northern Ireland and one by my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes), representing a Scottish constituency, and that I am the first Member representing an English constituency to be given, an opportunity to protest against the spending of a sum of money which will be contributed largely by English taxpayers.
Unlike my hon. Friends the Member for Fermanagh and South Tyrone (Mr. Healy) and the Member for Mid-Ulster (Mr. M. O'Neill), I am not making any protest on behalf of the people of Northern Ireland. I have no responsibility to them. I have a responsibility to the people of the United Kingdom, and a special responsibility to the people of Thurrock, who do not like to see their taxes increased on behalf of an institution in which they have no interest at all.
I know that this is a difficult question to answer, but I should like the Home Secretary to tell the Committee how the Governor will spend this enormous sum of£10,000. We are already assured that he does not pay any rent, that he has no fuel or transport costs, and does not pay his own office staff. On what will he spend£10,000? The Committee should have some indication before we are asked to vote in favour of the Clause.
The Amendment is far too mild. Although I support the Amendment, I should not have named a sum of money in it. I should have excluded words from the Clause and made it so read as to provide that the Governor's expenses in Northern Ireland should be determined by the Secretary of State. That would be much more equitable. I notice that the words, "from time to time determine" appear in the Clause. My recollection is that I asked the Home Secretary on Second Reading what the words meant, and that he assured me that they meant that this sum of money would be reviewed annually. I should be grateful for that assurance today.
I am very much in favour of the suggestion of my hon. Friend the Member for South Ayrshire that if the office of Governor were abolished, the hon. Members representing the Six Counties might take it in turn to fulfil the duties of that office. There are 12 of them. My hon. Friend the Member for Fermanagh and

South Tyrone would make an admirable Governor, even in a temporary capacity. It all goes to show how little the Governor has to do in Northern Ireland.
I am glad to see my right hon. Friend the Member for Blyth (Mr. Robens) on the Opposition Front Bench. He and one or two of my hon. Friends have done more at a week-end than the Government or the Governor of Northern Ireland have been able to do in the last 25 years. They, at least, have drawn attention to the parlous condition of employment in Northern Ireland. I see that the Governor is now going to send a deputation over here to discuss the very matters to which my right hon. Friend the Member for Blyth drew attention. I also see that some work is now to be given to some of the unemployed in Northern Ireland. That is another direct result of what my hon. and right hon. Friends did when they visited Northern Ireland.
If the Governor did a similar job I should have no objection to increasing his salary, but he does not, and nobody seems to know what he does. I hope that the Home Secretary will give us an assurance about the annual review of expenses, and will tell us what the Governor will be doing in return for this sum of£10,000. If the right hon. and gallant Gentleman gives us that assurance, we may not force the Committee to a Division.

9.0 p.m.

Mr. E. Fernyhough: It is rather remarkable that in a debate on an Amendment such as this Members on the Government benches should remain so silent. One would have thought that they would have been very anxious to support the Home Secretary and to defend this particular Clause. But perhaps they know as well as I know why they are remaining silent.
This Bill, and more particularly this Clause, is putting last things first. Last Thursday I asked the Leader of the House whether he did not think we ought to provide time for a debate on the serious unemployment position in Northern Ireland. He could not find time for that, although he has found time for this little, miserable, niggling Bill that nobody wants. The Prime Minister, in reply to a question last Thursday on the serious position in Northern Ireland, said it was very serious and very painful.
If that is so, what must be the reaction of the ordinary people in Ulster at a time when thousands of unemployed are seeking jobs which do not exist under Toryism? Imagine the single man in Ulster tonight with his 32s. 6d. a week or the married man with his 54s. a week. I bet they feel delighted that, at a time when their suffering is being ignored and when this Imperial Parliament is indifferent to their difficulties, we are finding time to remove the financial difficulties and hardships which afflict the Governor.
What I cannot understand is this. Some time ago there was a Motion before this House that Members' salaries should be increased. What did we do? It was said there were shoals of letters and bags of protests from all over the country. What for? Because we were going to give each Member on an average an increase of£250 a year. If the people who protested against the£250 for Members are remaining indifferent to an increase of£6,000, it only shows what a lot of humbugs they are. Some of us never believe that the letters arrived here. None of us read them, and we did not get any or hear about them in our constituencies.
But it seems to me a shocking thing that, at a time when Northern Ireland is going through grave economic difficulties and when large sections of the industrial population are finding it difficult to make ends meet and are denied the right to work, we should bring this Measure forward to increase the Governor's salary. To me it is very inappropriate.
This week we are going to discuss defence, and all the money we are going to spend on it is for the purpose of protecting us from the dangers of aggressive, militation Communism. Believe me, if there is anything which makes Communists, it is this sort of thing where the people right at the top who have no difficulty are voted large sums of money which in the minds of the average worker are astronomical, while at the same time there is complete indifference to the workers' well-being and welfare.
It is a standing disgrace that the Members who represent Northern Ireland are not tonight protesting about this increase. They know what is happening to their own people and they know of the difficulties and sufferings which they are under-

going. For my part, I could never be a party to supporting an increase of this kind on the part of a Government which is completely indifferent to the well-being of tens of thousands of loyal citizens in Ulster.

Mr. Alfred Robens: The Committee this evening is having to determine whether the maximum expenses of the Governor shall be at the rate of£10,000 or£4,000 a year. We are all agreed that it is a good thing that the salary of the Governor should be divorced from expenses. We have to decide what should be the maximum amount of expenses that he may incur.
I gathered from the right hon. and gallant Gentleman during the Second Reading debate that, merely because there was a maximum of£10,000 per annum, it did not necessarily mean that the Governor would spend that amount, and the right hon. and gallant Gentleman indicated that there would be an estimate of the expenses likely to be met and that the Governor would be expected to keep within that estimate. Consequently the Minister and the Treasury have decided that at no time could that estimate or the actual spending exceed£10,000 a year.
Two of my hon. Friends from Northern Ireland take the view that the maximum should be£4,000 and they have indicated that, from their own personal knowledge and as residents of Northern Ireland,£4,000 would be an ample upper limit for the expenses of the Governor. We have not discovered what the functions of the Governor are in respect of expenses that he will incur, although I gather that nothing can be charged if he opens Orange lodges.

Sir D. Savory: I have contradicted again and again that the Governor has ever opened Orange lodges. Why does the right hon. Gentleman repeat a charge which he knows to be untrue?

Mr. Robens: I am glad that the hon. Gentleman has cleared up that matter, because it concerns many of us. Obviously, if the expenses of opening Orange lodges were to be charged against the Governor's expenses, it would be wrong.
We have to decide, therefore, whether the sum should be£10,000 or£4,000. My hon. Friend the Member for Jarrow (Mr. Fernyhough) made an important


contribution when he said that at this time and day, when unemployment is mounting rapidly in Northern Ireland and week after week we see regretfully in the newspapers more and more discharges of workers from their jobs, it is important that if this Committee is to say that the maximum permitted expenses of the Governor shall be£10,000 per annum, we must have from the Home Secretary the details of how those expenses have been arrived at.
None of us wants or expects any servant of the Crown to incur expenses in his proper and lawful functions and duties and to pay for them out of his own pocket, and in this Bill we are determined that he shall receive a salary of£4,000 per annum out of which we do not expect him to pay expenses which he incurs directly as a result of his duties as Governor. Therefore, what the Home Secretary must do this evening, before we can part from this Amendment, is to satisfy the Committee that a sum of£10,000 is really necessary in connection with the duties and the functions of the Governor.
In view of the fact that we gave the Home Secretary due warning during the Second Reading debate that such was necessary, I hope he will tell us in detail what decided him and the Treasury officials that the maximum should be£10,000 and not£4,000, as my two hon. Friends have indicated, because they speak with great knowledge of the work performed by the Governor, and we do not know precisely what may be his functions, although the Home Secretary knows. I shall be glad, therefore, if the Home Secretary will spend his time on this one point as to why£10,000 was decided as the maximum sum which might be incurred as expenses, what he thinks the estimate might be for the first year and how, in great detail, he arrives at that estimate.
There are two reasons why I want the right hon. and gallant Gentleman to give us the information in great detail. One is for the benefit of public opinion in Northern Ireland. The people of Northern Ireland really must be satisfied that these expenses are proper expenses and ones necessarily incurred in the duties of the Governor. The second is that the right hon. and gallant Gentleman must give the Committee very good reasons why the

maximum permitted expenses should be£10,000 and not£4,000.
I hope the Home Secretary will be able to assure us by giving us great detail about the sum required. The House of Commons will never be niggardly about providing proper expenses for servants of the Crown for whom it is responsible. I should be glad if the right hon. and gallant Gentleman would give us a very careful analysis of the estimate of the proposed expenditure so that the Committee may judge whether it should agree tonight to a maximum of£10,000 or the maximum of£4,000 suggested in the Amendment.
The Secretary of State for the Home Department (Major Gwilym Lloyd-George): We have had a fairly exhaustive debate on the Amendment, as indeed we had on the Clause itself on Second Reading. I do not think the Committee has heard anything very new tonight. Therefore, hon. Members will not be surprised, I am sure, if they do not hear anything very new from me; the same speeches very often require the same answers.
One or two points have been put by right hon. and hon. Gentlemen opposite and I will do my best to deal with them. I know the difficulty of confining a discussion about this part of the world to the subject of any Amendment. So it has turned out tonight. We have had a reference to Partition, which I should have thought was entirely out of order. On that subject I would merely say that the Government are simply carrying out the statute enacted by Parliament in 1920 and amended in 1922. That question is really not relevant at present, nor, I suggest, is any resolution from the National Farmers Union which apparently did not come.
It has been pointed out that many of the present Governor's predecessors were out of pocket, and indeed the present Governor is very much out of pocket as a result of his occupying the office. The right hon. Gentleman the Member for Blyth (Mr. Robens) said, and I agree with him, that nobody wishes any representative in such a position to experience that embarrassment.
I should like to say a word or two on the question of the salary.

Mr. M. O'Neill: When the Governor was appointed, was he aware that he would be out of pocket?

Mr. Fernyhough: When the Governor intimated that he was out of pocket, did he say by how much? Can the right hon. and gallant Gentleman tell us that?

Major Lloyd-George: No, I could not say—obviously I should not know it—but I shall deal with the point in a minute. The hon. Member for Mid-Ulster (Mr. M. O'Neill) asked whether the Governor knew when he took office that he would be out of pocket. I do not know whether he did, but if he read Hansard he probably did know because when the amending Act of 1922 was going through the House the Government spokesman said that one could not carry out the duties of such posts on the salaries that were paid and that every one of the salaries had been fixed below what the occupant of the post was expected to spend.
That was in 1922. I suppose that there were then a few people who could contemplate taking an official position where they would spend more than they could possibly receive, but despite all that was said by the hon. Member for Fermanagh and South Tyrone (Mr. Healy)—he said there were plenty of people who could do the job—I do not think there would be plenty of people who could do the job at the present time.

9.15 p.m.

I now turn to the question of the actual remuneration, which is a matter of some importance. I do not know whether it would be in order to refer to both salary and expenses, but I might do so simply to make the position quite clear and remove any misapprehension.

The Chairman: This Amendment deals only with expenses, but it might be for the convenience of the Committee to discuss the two, which obviously go together.

Major Lloyd-George: There is some confusion about this. So far as the salary is concerned—it is£4,000—that is taxable as is anybody's salary. No question arises; the£4,000 is subject to Income Tax.
The Amendment refers to the£10,000 expenses. There is a good deal of misconception about that. The Bill says that the allowance is in respect of expenses not exceeding£10,000 in any one year:
… as the Secretary of State may, with the concurrence of the Treasury, from time to time determine.

Therefore, there is a limit to the expenses that can be claimed and that limit can be varied from time to time. What the Governor gets may from year to year be varied by the Secretary of State in concurrence with the Treasury.
How was this figure of£10,000 arrived at? It was arrived at by an examination of the accounts of expediture for a specimen year and by adjusting that expenditure to take into consideration subsequent increases in wages and costs. I can assure the House that, from the examination made, it is clear that there is not likely to be a substantial margin.
The right hon. Member for Blyth (Mr. Robens) asked me for details. I am not able to give him actual, detailed expenses, but I can show the sort of things that would be involved. They are domestic supplies for his official duties, servants' wages, food, entertainment and the salaries of private secretaries. Judging by the examination of the specimen year's accounts, this expenditure alone would amount to almost the figure suggested in the Amendment. Salaries alone amount to about£3,600 and if to that is added just over£2,000 for food, one gets nearly£6,000 of expenses, already proved from the specimen years' accounts. These are actually proved figures and go far beyond the figure which this Amendment suggests.
When it comes to the question of how the allowance will be determined from year to year, the Committee might like to know what we have in mind. The expense allowance, which will be given, will be related to actual expenditure in any one year. Estimates will be submitted by the Governor at the beginning of the year, together with the accounts of the actual expenditure for the preceding year. The Comptroller and Auditor General will have the right of access to the relevant documents, so that there is complete control. Over-spending and under-spending during the year will be taken into account in determining the allowance for the following year.
In case I am misunderstood, let me repeat some very careful words. Somebody asked me whether this allowance of£10,000 would be subject to Income Tax. The expenses will be liable to scrutiny for Income Tax in the normal way. What that means is that they will have to be shown to have been wholly, necessarily


and exclusively incurred in the performance of the duty. I think that there is a sufficient safeguard.
The estimate has to be made. That will be based on actual expenditure the previous year, and that expenditure will be very carefully scrutinised. The Secretary of State, in concurrence with the Treasury, will have to agree, and the Comptroller and Auditor General will have access to the documents. I do not think that we could possibly have a better supervision than that.

Mr. Healy: Will these expenses be put before the House of Commons? Will we be able to see them?

Major Lloyd-George: I do not think so. In any case, the hon. Gentleman need not worry. The Treasury may be relied upon to keep a careful control, and we have the Comptroller and Auditor General, too. I do not think that the hon. Gentleman need worry about that. The matter will be in pretty safe hands.
There is one other point. It was out of order to discuss unemployment on Second Reading. I want to make a short statement about it. The matter has been given great attention for a considerable time, as the right hon. Gentleman the Member for Blythe knows. He himself has been anxious to put forward schemes, as have others. I think that I have told hon. Members before that the matter is now being examined actively, both inter-Departmentally and inter-Governmentally. I am hopeful, as the Prime Minister said recently, that the men discharged on completion of a passenger ship will be taken on for work on another ship about Easter. I hope that that will be some help.
Nobody underestimates the difficulty. We are doing everything we can to put it right.

Mr. M. O'Neill: The shipyard workers are not the only people.

Major Lloyd-George: I appreciate that. I do not want to minimise the difficulty in any way; I hope that the hon. Gentleman will acquit me of that. The fact is that the position today is a little better than it was a year ago. That does not mean to say that satisfies anybody. The Government are doing everything they possibly can to put it right.
I am sure that the Committee will not be surpised to hear me say that I cannot accept the Amendment.

The Chairman: Does the hon. Gentleman wish to withdraw the Amendment?

Mr. Healy: I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn. Clause ordered to stand part of the Bill.

Clause 2.—(Transfer of certain appeals from divisional court to Court of Appeal.)

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. Healy: The Northern Ireland Government have got completely out of the undertaking they gave in the 1920 Act They were obliged to pay£5,000 towards the Governor's salary. The Joint Exchequer Board, which I believe is in a unique position in that it meets only every 10 years, has reduced the liability of the Northern Ireland Government to£2,000. Now the Northern Ireland Government want to get out of all their liability.

The Joint Under-Secretary of State for the Home Department (Sir Hugh Lucas-Tooth): On a point of order. I think that the hon. Gentleman is not aware that Clause 1 has been added to the Bill and that we are now discussing Clause 2.

The Chairman: Yes. I was looking for a reference to this in the Clause. It is in Clause 1, I am afraid, and we have passed that.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 3 and 4 ordered to stand part of the Bill.

Clause 5.—(LEGISLATIVE POWER IN RESPECT OF CORONERS.)

Mr. Healy: I beg to move, in page 4, line 1, to leave out "removal."

The Chairman: Perhaps it would be convenient to discuss at the same time the Amendment in line 2, to leave out "jurisdiction or functions."

Mr. Healy: Yes. The Northern Ireland Government seek to get rid of certain responsibilities in respect of certain appointments. The Civil Authorities (Special Powers) Northern Ireland Act,


1922, can be put into force any time the Government please. It is abrogated for the moment, but only temporarily. The Northern Ireland Government can
prohibit the holding of inquests by coroners on dead bodies in any area in Northern Ireland specified in the order, either absolutely or except in such circumstances or on such conditions as may be specified in the order
or they can
prohibit the holding of any particular inquest specified in the order….
That is an extraordinary power which the Northern Ireland Government seek to take. We know that it was only in the case of an emergency that the Government of this country ever sought powers of that kind, and it was only for a short time during the "Black and Tan" period in Ireland. But the Northern Ireland Government have kept this Act on the Statute Book for 30 years and they have power by Order in Council to make it effective.
Recently there occurred a case in County Derry where an inquest was to be held on a child. Out of all the specialists to whom the Northern Ireland Government pays fabulous salaries, and from all the doctors in County Derry and up to Belfast, the coroner could not find a single doctor to do a post mortem. The coroner threatened to put in force the well-known and comprehensive powers of coroners, which so frighten the Northern Ireland Government that they now wish to abolish the handicap or impediment imposed by the 1920 Act.
They will now be able to appoint their own friends on their own conditions to any position as coroner in Northern Ireland. They have an almost exclusive bench of magistrates or referees or chairmen of tribunals, every single one of whom was prominent politically or as a helper of the Northern Ireland Government in quite recent times. They wish now to take the same powers with regard to the appointment of coroners. This is something which is whittling down the 1920 Government of Ireland Act Section by Section and line by line until it is repealed.
The limitations of the 1920 Act were imposed in order that ultimately there might be a united Ireland; that the Northern Ireland Government should eventually feel the need of a united Ireland. In the meantime, certain impediments were imposed on them to make

them reconsider their antagonism to a united country. That is the reason why my hon. Friends and I oppose Clause 5.

Lieut.-Colonel Hyde: I am a little puzzled by the terms in which the hon. Member for Fermanagh and South Tyrone (Mr. Healy) moved his Amendment. He said that, as it stands at present, the Clause would give power to the Government of Northern Ireland to appoint coroners from among their friends in a way which would be objectionable to him, but in his Amendment he says nothing about appointments at all.

9.30 p.m.

The hon. Member objects to the Government of Northern Ireland being able to legislate for the removal of coroners, and also in regard to their jurisdiction and functions, but he says nothing about the appointment of coroners. The present law relating to coroners in Northern Ireland dates back to the old days of the Union, when the whole of Ireland was part of the United Kingdom. It is governed by the Local Government (Ireland) Act, 1898, which laid down that the appointment of coroners should be—as it is in this country today—in the hands of local authorities, and also that the power to remove coroners for disability or misconduct of any kind should rest with the Lord Chancellor of Ireland.

When the Government of Ireland Act was passed in 1920, and local Government in Northern Ireland was set up, that power of the Lord Chancellor devolved upon the Lord Chief Justice of Northern Ireland. So far as I know there has never been any complaint about that power, but it may be that the Government of Northern Ireland, as part and parcel of the whole question of coroners, wish to legislate for the removal of coroners as well as for their appointment.

The hon. Member for Fermanagh and South Tyrone spoke about the Civil Authorities (Special Powers) Act, 1922, under which the Government of Northern Ireland, he suggested, had power to prohibit of holding of inquests altogether. That is not my construction of that Act. Section 10 does not give an absolute power of prohibition; it merely gives a limited power of substitution. It says:
the Minister of Home Affairs may … prohibit the holding of inquests by coroners on dead bodies… in Northern Ireland….


It goes on to say that if he does that he has to provide that both the functions of the coroner and jury must be carried out by someone else.

There is no power to prohibit inquests. There must always be an inquest on a dead body, where the circumstances are unusual and a doctor's certificate has not been issued.

Mr. Healy: Can the hon. and gallant Member tell me for what purposes the Northern Ireland Government want to prohibit the holding of an inquest?

Lieut.-Colonel Hyde: The Northern Ireland Government never wished to prohibit the holding of an inquest. What they wished to do, for purposes of convenience, was, in certain cases, to make it possible for the coroner to sit without a jury.

Mr. Healy: Section 10 (1, a) says that the Minister may
prohibit the holding of inquests by coroners on dead bodies in any area of Northern Ireland specified in the order, either absolutely or except in such circumstances or on such conditions as may be specified in the order; or, prohibit the holding of any particular inquest specified in the order…

Lieut.-Colonel Hyde: It is perfectly clear on the face of it that there is no absolute power to prohibit the holding of an inquest. There is simply the power of substitution, namely, that a coroner can in certain circumstances sit without a jury. In England and, I believe, in Scotland only in a very small proportion of cases is it necessary for a coroner to sit with a jury. The purpose of this Section was simply to allow the coroner in those cases to sit without a jury in Northern Ireland.

Mr. Healy: It says in subparagraph (c) that the Minister may:
Provide for the duties of a coroner and a coroner's jury (or either of them) as respects any inquest prohibited by the order…

Lieut.-Colonel Hyde: I do not want to take up the time on the Committee on this point.
I have not the Act in front of me, but from my reading of it I understand that the way in which it has been applied in Northern Ireland has simply meant that in certain circumstances the coroner can sit without a jury. The coroner to whom

this power has been applied particularly has been the Coroner for the City of Belfast, who has to hold an average of three inquests a day. It is not convenient, except when he should ask for it, for him always to sit with a jury.
The purpose of this Clause is to bring the law concerning coroners in Northern Ireland into line with the law for the rest of the United Kingdom under the Coroners Act, 1926, which sets out quite clearly the circumstances in which coroners should sit with juries and the circumstances in which it is not necessary for them to have juries. I am sure that the hon. Member for Fermanagh and South Tyrone will appreciate that a much greater strain is put upon the juries in Northern Ireland than those in this country.
There is a much larger jury panel in Northern Ireland. That is because here it is the exception rather than the rule that civil actions in the High Court should be tried with a jury, but in Northern Ireland it is the rule rather than the exception that civil cases should have juries. That means that greater demands are made upon the jurors of Northern Ireland, and that is all the more so because the power of challenging jurors in the High Court and in the lower courts is much more frequently exercised in Northern Ireland than it is in this country. A very large jury panel has to be maintained. Therefore, it is an incubus upon the coroner if he has to have a jury in cases in which in this country it would not be necessary for him to sit with a jury.
That brings me back to the Special Powers Act, which simply confers upon the coroner the right of sitting without a jury. It certainly seems not unreasonable that the Parliament of Northern Ireland should have power to legislate in all matters relating to coroners, and to bring the law in relation to coroners into line with the law in this country. It is therefore time——

The Deputy-Chairman: The hon. and gallant Gentleman seems to be advancing an argument which would be more appropriate to the Motion, That the Clause stand part of the Bill, than to this specific Amendment.

Lieut.-Colonel Hyde: The hon. Member for Fermanagh and South Tyrone has


sought to restrict the powers which it is proposed to confer upon the Government of Northern Ireland in regard to this matter. He has not sought to restrict completely those powers, but simply to restrict them in relation to removal, with which I have already dealt, and in regard to jurisdiction and functions. My point is that, in regard to jurisdiction and functions, which are the essence of the question, the Parliament of Northern Ireland should specifically have power to legislate, and so bring the law in relation to coroners in Northern Ireland into line with that of England.

Mr. Healy: I would draw the attention of the hon. and gallant Member for Belfast, North (Lieut.-Colonel Hyde) to what the Civil Authorities (Special Powers) Act said. He has tried to convey the idea to the Committee that the simple question here is that the Northern Ireland Government desire powers for coroners to hold inquests without a jury. It is the very opposite. That Government want to get rid of both the coroner and the jury. The Act says that the Minister may, by Order,
… provide for the duties of a coroner and a coroner's jury (or of either of them) as respects any inquest prohibited by the Order being performed by such officer or court as may be determined by the Order.
It says "officer or court." They want to get rid of both coroner and jury and to appoint an officer or court.

Sir H. Lucas-Tooth: The effect of the two Amendments in the name of the hon. Member for Fermanagh and South. Tyrone (Mr. Healy) would be to emasculate the Clause. I gather from his speech that that is not his intention and that he approves of the general intention of the Clause.
He now raises the point which was raised by the hon. and learned Member for Hornchurch (Mr. Bing) on the Second Reading, that if the Clause were passed the Northern Ireland Government might give an undertaking that, as a quid pro quo they would give up the power of prohibiting inquests. In my reply I gave the House an assurance that the Civil Authorities (Special Powers) Act of

Northern Ireland had no conceivable reference to what is intended to be done under the Clause.
Following on the debate, I got into touch with the Northern Ireland Government. I can now confirm that that statement is strictly correct. One Section of the Civil Authorities Act enables the Government of Northern Ireland to substitute an alternative form of tribunal for the regular coroner's court. There is no intention whatever on the part of the Northern Ireland Government to take anything resembling such powers in the new coroner's legislation for which they are, so to speak, seeking authority under the Bill.
It has, however, come to my notice that two orders relating to the Belfast coroners, which dispense with a jury unless the coroner requests one, have remained in force as a matter of expediency. Those two orders have never been criticised in any quarter and the relief afforded to Belfast juries has been welcomed. The Northern Ireland Government have promised to promote immediate legislation to apply provisions similar to those of Section 13 of our Coroners (Amendment) Act, 1926. That Section provides for the holding of inquests without juries in certain cases. The law in Northern Ireland will be on the same basis as it is here.
This provision will allow those orders to be terminated without inconvenience. I am assured that, in future, similar orders will not be used except in circumstances of real and immediate necessity.

9.45 p.m.

I think that gives the hon. Member for Mid-Ulster (Mr. M. O'Neill) a full answer to the points he raised. I can assure him that the matter would not be affected by his Amendment, but, as the matter has been discussed, I thought it might be most appropriate for me to give the answer now.

Amendment negatived.

Clause ordered to stand part of the Bill.

Clause 6 ordered to stand part of the Bill.

Schedule agreed to. Bill reported, without Amendment.

9.46 p.m.

Sir H. Lucas-Tooth: I beg to move, That the Bill be now read the Third time.
The Bill has been fully discussed and each Clause in it has been passed by the Committee without a Division. We are now, of course, confined to discussing what is in the Bill, and, as the House has clearly indicated that it approves each of the provisions of the Bill separately, I hope that it will now see its way to give a unanimous Third Reading to the Bill.

9.47 p.m.

Mr. Robens: I think we can agree to give this Bill its Third Reading without a Division, but there is one point which I think might be cleared up before we part with it and it goes to another place.
My hon. Friend the Member for Mid-Ulster (Mr. M. O'Neill) asked the Home Secretary whether or not particulars of the expenses of the Governor would be given to this House. I rather gathered from the reply that the Minister said that they would not be given, but I should like the Joint Under-Secretary to clear up the point.
Would it not be the case that, if my hon. Friend were to put down a Question at the appropriate time as to what were the actual expenses incurred by the Governor of Northern Ireland, he would be given a reply either by the Home Secretary, the hon. Gentleman himself or somebody from the Treasury? Surely, it must be the case that, when Parliament has decided that a maximum of£10,000 may be incurred as expenses, Parliament should be able to inquire from time to time what is the exact amount of expenses in total which has been claimed? I think that if the hon. Gentleman were to clear up that point, it would give a rather better reply to the question which my hon. Friend put to him.

Sir H. Lucas-Tooth: If I may reply, by leave of the House, I would repeat that, as my right hon. and gallant Friend the Home Secretary said, the particulars of the Governor's expenses being charged on the Consolidated Fund will not be before the House in the ordinary way. I am advised that in such cases, if the right hon. Gentleman or any hon. Member were to put down a Question, an answer could be given in principle, but not in detail. I am not quite certain how far that goes, I am bound to confess. I think the hon. Member would be given

all the information he required for the purposes of argument without being told the precise particulars of an individual private income, which would otherwise have to be disclosed. I think that is the answer which the right hon. Gentleman requires.

Sir William Darling: On a point of order. Is it not quite improper for a promise to be given that the private financial relations between a taxpayer and the Revenue may be disclosed to an hon. Member of this House?

Mr. Deputy-Speaker (Sir Rhys Hopkin Morris): That is not a point of order for me at all.

9.50 p.m.

Sir D. Savory: I have been under the impression during the whole of the discussion on the Bill that the question in which some hon. Members are interested is not that of the Governor's salary, but that what they really want is to have no Governor at all. They have simply used the Bill——

Mr. Deputy-Speaker: We can only discuss now what is in the Bill.

Sir D. Savory: What is in the Bill has been proved to be absolutely reasonable: first, that the salary of the Governor is one on which he has to pay Income Tax, and that the allowance for expenses is extremely reasonable compared with the expenses allowed to our Governors and to our Ambassadors abroad. A full answer has been given on that question.
With regard to the£2,000, on which stress has been laid, it has also been shown that this expense, although nominally no longer to be defrayed by the Government of Northern Ireland, will be met by the fact that the Government of Northern Ireland have taken over the secretarial and the office expenses—the maintenance of the office, typewriters, and so on—and that this will really amount to the£2,000 which nominally the Government of Northern Ireland are no longer paying.
The question of coroners has been dealt with fully by my right hon. and gallant Friend the Home Secretary. It has been shown that what the Government of Northern Ireland desire is simply to have the same position as the Government over here. My right hon. and gallant Friend


has given an assurance that in no case under the Special Powers Act will the verdict be taken away from the coroner, but that it may be a question, as is so often the case in England, of having a coroner's inquest without the jury because such a large number of cases comes before the Belfast jury and a good deal of unnecessary strain would be put upon them if it were always essential for a coroner to have a jury. It is, therefore, purely a practical question and not a political question, and it has been solved most reasonably.
The Bill is necessary owing to the fact that, as has been shown, the Governor is unable to meet his expenses, and we do not want him any longer to be financially embarrassed. The remaining Clauses of the Bill are largely technical and I am glad that they have been allowed to pass unopposed. I therefore share the hope of my hon. Friend the Joint Under-Secretary of State that the Bill will be given a Third Reading without a Division.

Question put and agreed to.

Bill accordingly read the Third time and passed.

FISHERIES [MONEY]

Resolution reported,
That, for the purposes of any Act of the present Session to increase the maximum amount of the grants which may be made out of moneys provided by Parliament to the Herring Industry Board for the promotion of the sale of herring and other purposes; to confer on the Minister of Agriculture and Fisheries and the Secretary of State powers to make grants and loans for the execution, for the benefit of the fishing industry, of harbour and other works and to determine certain existing powers in that behalf; to empower the Secretary of State to operate dredgers; and for purposes connected with the matters aforesaid, it is expedient—

(1) To authorise the payment, out of moneys provided by Parliament, of—

(a) any increase in the sums, payable out of moneys so provided which is attributable to any provisions of the said Act raising by five hundred thousand pounds the limit imposed by subsection (1) of section five of the White Fish and Herring Industries Act, 1948, upon the aggregate amount of the grants which may be made under that subsection out of

moneys so provided and enabling that limit to be further raised by an amount not exceeding two hundred and fifty thousand pounds;
(b) any expenses incurred by the Minister of Agriculture and Fisheries and the Secretary of State in giving, to public authorities or associations of persons or companies not trading for profit, financial assistance in respect of—

(i) the execution of works for the construction, improvement or repair of harbours, piers, quays, jetties, boatslips or slipways in Great Britain, the landward approaches thereto or buildings, structures or apparatus thereat;
(ii) costs incurred in or in connection with the preparation of plans and specifications of such works, reports with respect thereto and estimates of expenses to be incurred for the purposes of the execution thereof; or
(iii) the remuneration of persons employed in an advisory or supervisory capacity in connection with the execution of such works;
(c)any expenses incurred by the Minister of Agriculture and Fisheries or the Secretary of State by virtue of any provision of the said Act vesting in the one or the other of them liabilities of the Treasury under agreements made by the Treasury for the making, under Part I of the Development and Road Improvement Funds Act, 1909, of advances for the construction or improvement of harbours; and
(d) any expenses incurred by the Secretary of State in operating dredgers;

(2) to authorise the payment into the Exchequer of—

(a) any sums received under or by virtue of the said Act of the present Session by the Minister of Agriculture and Fisheries or the Secretary of State; and
(b) any moneys in the hands of the Queen's and Lord Treasurer's Remembrancer representing any part of sums heretofore provided by Parliament for the purposes of the Fisheries Act, 1824; and

(3) to authorise the Minister of Agriculture and Fisheries and the Secretary of State respectively, as respects—

(a)any loan made by him under the said Act of the present Session; or
(b)any loan in respect of which rights and liabilities of the Treasury vest in him by virtue of the said Act of the present Session;
to remit (with the consent of the Treasury) payment of interest on, or repayment of the principal of, the loan, or both."

Resolution agreed to

FISHERIES BILL

Considered in Committee.

[Sir RHYS HOPKIN MORRIS in the Chair]

Clause 1 ordered to stand part of the Bill.

Clause 2.—(Financial assistance for CONSTRUCTION, IMPROVEMENT AND REPAIR OF FISHING FACILITIES.)

Motion made, and Question proposed, That the Clause stand part of the Bill.

9.54 p.m.

Mr. C. N. Thornton-Kemsley: I shall not detain the Committee for any length of time at this hour, but I should like to ask one or two questions about the Clause, which is of great importance to constituencies which have inshore fishing harbours. As I understand it, the grants for harbour improvements are made at present by the Treasury upon the advice provided from the Development Commission. But, in practice, in the case of Scotland the Development Commissioners, before recommending a grant, always go to the Scottish Home Department and ask for advice.
The Commissioners comprise, I believe, of seven or eight unpaid members, only one of whom represents Scotland. It must be clear, therefore, that the advice of the Scottish Home Department has been decisive in any consideration by the Treasury of whether a grant should be made.
I have no complaints about the way in which the present procedure has worked, but I have had recent experience, however, with regard to the harbour at Gourdon, in my constituency, where an improvement to the breakwater of the outer harbour and improvement to the quays and quay walls cost£27,000. That was a very heavy cost indeed. There was also a sum for harbour lighting.
Everyone was extremely helpful. We had very good advice from the Firth of Forth Fishermen's Association, whose jurisdiction extends as far north as my constituency. The Kincardineshire County Council, which is the harbour authority, was very helpful, and so was the Scottish Home Department. We received a grant of 75 per cent. of the cost. I do not complain about that, but

it so happens that the grant does not really cover the cost.
The amount to be found by the county council is such that I am afraid it is almost inevitable that it will have to ask for increased landing dues on the fish landed in that harbour. In a small county like Kincardineshire the sums which are necessary to meet capital costs of improvements of this order on comparatively small harbours like Gourdon, Johnshaven and Stonehaven, together with the annual cost of maintenance of the harbours, are such that almost inevitably it is more than the harbour authority can bear, and more than the rates can bear without a considerable increase in landing dues.
It seems to me entirely justified that when the joint Under-Secretary, representing the Secretary of State, takes over responsibility for these harbours from the Development Commissioners, he should consider the ease of small counties like Kincardineshire, and that the grants should be generous, because these small harbours are harbours of refuge to shipping in times of storm.
Will the grants which are contemplated under the Clause coyer harbour lighting, which is an expensive item? It is not clear from the wording whether the Clause also covers the erection of fish markets at the pier head. That is something which is very often required. I hope that it is covered by the Clause. I plead with the Joint Under-Secretary that the Clause should be interpreted as widely and as generously as possible.

10.0 p.m.

Mr. Edward Evans: We have two great problems on the East Coast, one of recent origin and one of very ancient origin. They are the problem of erosion and the problem of flooding. I was very disappointed to find, on Second Reading, that the sum envisaged in the Financial and Explanatory Memorandum in respect of harbours was more or less stabilised at£291,000 a year. I hope very much that the Minister will tell us that that sum can be extended ad infinitum—if that is the proper phrase.
It is obvious if we are going to have a limited sum, the position will be difficult when flooding or erosion takes place, as it does on the East Coast. I am hoping that these harbour grants will be available for the restitution of harbour works


and that where necessary, it will be possible to make an arrangement with the coast protection authority where danger is caused by surrounding erosion and by flooding. I should like some sort of an assurance that we are not going to be tied down to the global sum of£291.000.

Mr. Douglas Marshall: I should like to support what the hon. Member for Lowestoft (Mr. Edward Evans) said, that there should be a certain degree of flexibility in order to meet coast defence needs. Attention was drawn to that aspect on the Second Reading of the Bill, and I trust that the Minister will make a reference to it, and confirm that there is flexibility and that we are not limited to this sum.

The Joint Under-Secretary of State for Scotland (Mr. Henderson Stewart): I can give that assurance immediately, and say that it was given by the Minister of Agriculture in the Second Reading debate. In reply to a question of a similar nature by the hon. Member for Lowestoft (Mr. Edward Evans) he said:
As far as I know there is no limit whatever on the amount."—[Official Report, 14th February, 1955; Vol. 537, c. 39.]
Each case will be considered on its merits, as it has been in the past.
The figure here is an estimate of what we fancy may be the expenditure next year, based upon our experience in the past year or two. I assure my hon. Friend the Member for North Angus and Mearns (Mr. Thornton-Kemsley) that applications will always be looked at in as generous and as liberal fashion as possible. But that is nor. quite ad infinitum as suggested by the hon. Member for Lowestoft.

Mr. Edward Evans: I could not think of a better term.

Mr. Stewart: No, I think we all appreciate that.
As to Gourdon Harbour, as my hon. Friend knows, there is an application by the county council before us now for a very substantial scheme costing a good deal of money, and that is being examined. I have no doubt that items such as harbour lighting and fish markets could quite properly be included in an application for a scheme under this Clause, but again each case must be examined and approved on its merits. That being so I hope that I

have satisfied those who have asked questions.

Question put and agreed to.

Clause ordered to stand part of the Bill,

Clauses 3 to 7 ordered to stand part of the Bill.

Schedule agreed to.

Bill reported, without Amendment; read the Third time and passed.

OFFICERS' PENSIONS

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Studholme.]

10.5 p.m.

Brigadier Ralph Rayner: As a retired officer, I rise once again to bring forward the question of the pay of retired officers, for I consider that the Treasury must reconsider its attitude towards the Services. When I was a young officer that attitude used to be, "Give 'em as little as you can and take back what you can when you can," and it is an attitude which still persists. In those early days it was regarded as rather a joke, if a wry one, because the pound was still a golden sovereign, and although pay and pensions had not changed between 1840 and 1914, most officers had private resources. The-first world war began to change all that, the value of the£ began to vary, and private means to melt away.
In debates we have had on this subject one Government spokesman after another has held that all servants of the Crown must be considered as a whole. This is not fair. The civil servant is able to marry early, establish a home, buy a house, perhaps to save, whereas the officer who is moved about the world chessboard, can do none of those things. I will not labour the differences between the officer and the civil servant because they have been referred to so many times, but there is one Treasury argument I must mention, that the officer retires early and therefore draws his pension for a much longer time. The fair way of expressing that truth is that the civil servant is lucky enough to enjoy full pay much longer than the officer.
Moreover, the dictum that servants of the Crown should be treated equally becomes even more suspect when one notices how often the Civil Service is able to


better itself. Again I will not waste the time of the House by quoting figures that have often been quoted, but there is no doubt that our national set-up is a bit cock-eyed in that way as in so many others. The agricultural worker is perhaps the most skilled and hard-working man in the country. Yet when his wages So up, the wages of the industrial worker, even though he is still something to the good, have to go up too so that he may keep his place.
So I am afraid it is with the Civil Service. If the pensions and pay of the Army go up, the pay of the civil servant, who is already several notches to the good, has to go up so that he may keep his advantage. Senior civil servants, usually first-class chaps, often agree that this is unfair, and Lord Hailey, speaking in another place in the debate on this subject on 20th January, 1953, in referring to the pensions of officers who retired in 1919 said:
I believe that all retired civil officers … would agree that the officers of the Armed Forces must have a prior claim."—[Official Report, House of Lords, 20th January, 1953; Vol. 179, c. 1123.]
I draw the attention of the Government to that powerful and generous expression of opinion. I hope that the Undersecretary of State for War will suggest to his right hon. Friend the Minister of Defence that, amidst all the terrible problems that cluster around him, he should ask the Chancellor of the Exchequer to take a new look at the question of officers' pensions. Surely no increase in pension should be subject to a means test. Surely a pension is earned or it is not earned, and in these days, when the industrial unemployment pay means test has been abolished, it is disgraceful that an officer or his widow should be subject to a means test. Surely, too, it is the duty of the State to see that an officer is adequately looked after in his old age. He may have retired at 45, but we all know that after 45 it is very difficult to get a job and impossible to save.
I do not know whether some such scheme as this could be arranged. It is obviously not fair to expect that all new codes of pensions should be brought in with implemented retrospection, but could not an officer retiring be given, according to his appropriate code, x pounds per year and when he reaches 60 or 65 be given

x plus y pounds per year, the y element depending upon the cost of living? I am not competent to say whether that would work or not, but I repeat that we ought to do something a bit better about our Service pensions. Other countries all over the world are doing their retired warriors rather than better than we do ours.
I think it might even be fair to argue that a review of Service pensions should be included in the general review of armaments which is now taking place. Tomorrow and the day after we shall talk about all sorts of fantastic weapons, but we all know that when it comes to the point what matters most is men and morale. There is no doubt about it that many serving officers, however satisfied they may be with their pay, are very worried about their pensions. They see their elderly friends of the 1919 vintage trying to make do on the 1919 pension, and they wonder whether when the time comes their own pensions will buy no more than the 1919 pension buys today. This is not good enough in these days when we want the best boys in the Service. There is no doubt that a lot of serving and retired officers are dissuading their boys from entering the Service, and it is their boys that the Services want.
I now turn to the specific case of the officers who retired on the 1919 code. In that year the Government established a code by which pensions would rise or fall by 20 per cent. according to the cost of living. In 1935 another Government stabilised those pensions at 9½ per cent. below the 1919 rate. Under pressure, 10 per cent. was restored by the Government the other day with all the trappings of a generous gesture. It was not generous at all. If one takes 9½ from 100 one gets 90½ if one increases that by 10 per cent. one gets 99½. Therefore, the situation is that the survivors of the bloodiest war in history, a war in which most Regular officers in the Army, at any rate, were killed bearing the first brunt, are subsisting today on less than the 1919 pension. That cannot be described as "generosity."
But it is not really a matter of generosity; it is a matter of right. I hold that the 1919 officers were promised 20 per cent. more and that they should get it. But the Government say "No," so I propose now to examine the arguments which the last Minister of Defence put forward in another place and his Parliamentary


Secretary put forward in this place in three debates, with considerable personal discomfort I thought at that time.
First, it is held that in the Royal Warrant of 1919 the word "may" was used and not "shall" or "will." If any hon. Member reads that Royal Warrant today, he will decide, I think, that the intention of the Government of 1919 was that the pension would be raised 20 per cent. with the cost of living. Indeed, in the orders that translated that Royal Warrant into Naval and Air parlance, the words "shall" and "will" were in fact used. In 1935 the Treasury got hold of the word "may" and twisted it in the usual Treasury way to the disadvantages of the Services. That action was described in another place as "a rather mean quibble," and so of course it was.
Their second argument was that in 1935 officers welcomed the stabilisation of the Code. I have made wide inquiries and I cannot believe that that was so. Officers knew their Treasury and had seen the cost of living go up a little in 1934. However, although I cannot prove that they did not welcome it, the Government certainly cannot prove that they did. The truth of the matter is that it was not a question of "Take it or leave it," but just a question of "Take it."
Their third argument was even poorer. No Government, they said, could be expected to hark back and restore benefits cancelled out so long ago, and that if they did it would open the door to all sorts of other claims from all sorts of other pensioners. The open-door argument is a classic Treasury argument, but in this case it certainly does not apply, for there was a definite agreement in 1919 between a definite Government and a definite number of officers. There are not many left and the liability is even more limited today.
Lastly, they stated that in 1935 the new stabilisation seemed to be eminently fair as the cost of living was steady and seemed likely to remain so. "How could the Treasury be expected to foresee a vast rearmament programme?" asked the Parliamentary Secretary in a debate in this House in December, 1952. That is the poorest argument of them all. In 1934, Hitler had got into his stride and all over the country people were seeing the red light. Even I as a most humble candidate in South Devon had made 19 reported speeches in 1934 in which I said that

unless we rearmed to the teeth war was inevitable. I have my news cuttings book here, if anybody likes to challenge that statement.
The Treasury, as we all know, is always filled with some of the very best chaps in the Civil Service. We have reason as taxpayers to be grateful to them on many occasions. But on that occasion and on that date, if they were so stupid as not to see what was coming to us, then they have no right to visit their stupidity on a few helpless pensioners. I therefore submit that the Government's defence is so lame as to be permanently disabled and that it would be rejected by any 12 good men and true anywhere in the country. I ask once again that this limited, but very definite liability of the 1919 pensions should be reconsidered by the Treasury.
I conclude as I began on a rather wider note. In this country we are enveloped in a welfare state which appropriates a very large slice of the national income. A good deal of that money is used to provide benefits for people who could well fend for themselves and it is rather a pity that we cannot divert some of it towards giving better pensions. But although we live in the age of the common man it is still to the uncommon man that we must look to give us prosperity in peace and to save us in war. I have tried this evening to plead for those uncommon men who fought our ships and led our regiments and wings in one of the greatest wars in history. I hope that the Government will give it further consideration, for it will not pay in the long run to neglect them.

10.20 p.m.

Brigadier Christopher Peto (Devon, North): I wish to reinforce what has been said by my hon. and gallant Friend the Member for Totnes (Brigadier Rayner). In particular, I want to ask the Undersecretary to answer a question which has not so far been answered—why it was that in Command Paper 9092, in paragraph 26, it was stated that the Government:
accepted the recommendation of the Royal Commission in respect of Civil Servants and a similar recommendation made by the May Committee in respect of Forces' Officers…
that these pensions should be stabilised, whereas, in fact, paragraph 114 of the May Report says exactly the opposite, that:
We think it is not inequitable that as from a date as soon as possible after 1st July, 1931,


the rate of deduction should be based on the average cost of living over a period of six months before that date and that it should thereafter be subject to more frequent review.
That is entirely in the opposite sense to Command Paper 9092.

Paragraph 173 says:
We have already recommended an acceleration of the cost of living adjustment on pay and existing pensions and a similar adjustment should be made on future pensions.
Will the Government kindly answer the question why they have misquoted the May Report, misrepresented it throughout the country, and misinterpreted it.

The Under-Secretary of State for War (Mr. Fitzroy Maclean): The Under-Secretary of State for War (Mr. Fitzroy Maclean) rose——

Miss Irene Ward: Tell your boss to fight the Treasury.

Mr. Maclean: My right hon. Friend the Minister of Defence has asked me to reply to the debate. Everybody is bound to have considerable sympathy with the retired officers whose cause my hon. and gallant Friend the Member for Totnes (Brigadier Rayner) has pleaded so eloquently. I certainly have myself. But it must be remembered that their claims must inevitably be considered in relation to numerous other claims also deserving of sympathy, and in relation to the limited sums of money available.
As my hon. and gallant Friend pointed out, this whole subject has been debated a number of times recently. The arguments on both sides have been repeated again and again, and I am afraid that there is very little that I can add to the very full statements on Government policy which have been made on those occasions and in the White Paper of March, 1954.
As I understand the position, my hon. and gallant Friend's fundamental demand is for a general increase in officers' retired pay unrestricted by any means test. That would cut across a principle to which the present Government and their predecessors have long adhered; that is the principle that occupational pensions are varied only on grounds of hardship. By "hardship" in this context I mean not merely a reduction in the standard of living but severe hardships suffered by those on small total incomes, caused by falls in the value of money. It was on this principle that the Pensions Increase Acts of 1920, 1924, 1944, 1947, and 1952

and the corresponding Prerogative Instruments were based.
There are two points which I should like to emphasise once more in this connection. First, it must be remembered that public service pensions, being occupational pensions, are entirely different in character from, on the one hand, national retirement pensions and, on the other, war disability pensions. For instance, the old-age pension is contributory and aims at providing an assured basic income for old age. The Ministry of Pensions war pension compensates for loss of faculties, for disabilities sustained by the Service man due to his service.
The public service pension, on the other hand, is based on length of service and rank or pay on retirement. The other point is——

Lieut.-Colonel Marcus Lipton: But——

Mr. Maclean: I am sorry, but I cannot give way——

Mr. Ede: The hon. Member would lose his place if he gave way.

Mr. Maclean: Secondly, retired officers in the lower income ranges are already entitled to have their awards supplemented on grounds of hardship, and any proposal to remove the means test would benefit principally those who are relatively better off.
My hon. and gallant Friend has suggested some kind of reversion to the system of varying pensions in accordance with the cost-of-living index. That was the system introduced in 1919, and it was decided to abolish it in 1932 on the grounds that it was thought unsound that the remuneration of Crown servants should vary directly with the cost of living, whereas the remuneration of other members of the community should not.

Brigadier Peto: They are the only people who do not.

Mr. Maclean: There are large categories of people with fixed incomes as well as Crown servants.
My hon. and gallant Friend also suggested that officers who retired under the 1919 pensions code have been the victims of a breach of faith—[HON. Members: "Hear, hear."]—because of the decision to stabilise pensions at a level of 9£ per


cent, below the rates of 1919; But it is important to realise that the pensions code of 1919 was no more a contract entered into between the Government and retired officers than was the stabilisation of 1935. They were, in fact, both imposed—if "impose" is the word to use of an administrative act—by the Government on the officers in question. As has been said before, there is no real reason to suppose that the decision to stabilise which was taken in 1932 and implemented in 1935 was unpopular with those concerned.

Lieut.-Colonel Lipton: It was still an imposition.

Mr. Maclean: There is a tendency to talk as though the 9½ per cent. cut were still in operation. But, as hon. Members will be aware, that is not the case. Although my hon. and gallant Friend accused the Government of lacking in generosity, they did restore that cut, and that has, in one sense, finally done away with the whole system of variable awards. It was a system which was tried for a short time and was found to be unsatisfactory, and it was finally abandoned in 1935.
I would repeat once more that the principle regulating Government policy in this whole question is that the pensions of former public servants should not, in general, be adjusted to meet changes in circumstances which arise after their retirement.

Brigadier Peto: Why was it done in 1932?

Mr. Maclean: That change has been done away with by the Government's Measure last year. In 1935, pensions were stabilised finally to meet the cost of living at that time.

Miss Ward: Jolly bad show.

Mr. Ede: The poor fellow has to read it.

Mr. Maclean: I can only repeat that that is the principle upon which these pensions are awarded. It has also to be borne in mind that there is another aspect of the question. It is all very well for the right hon. Member for South Shields (Mr. Ede) to chip in the whole time, but the same principle was applied by his

Government and by succeeding Governments.

Miss Ward: But we must do better than they did.

Mr. Maclean: I am addressing myself to the right hon. Member for South Shields, and what his Government did.

Miss Ward: But they were no good.

Mr. Maclean: My hon. Friend supported the Governments——

Miss Ward: I never supported the Opposition when they were the Government.

Mr. Maclean: She supported the Governments before and during the war, who followed the same principle.
It is also important to remember that to introduce variable service pensions would be unfair to those other members of the community also living upon small fixed incomes, and who, as taxpayers, would have to bear part of any additional help given to public service pensioners.

Captain Richard Pilkington: Cannot they be considered as a category completely apart?

Mr. Maclean: They cannot be considered completely in isolation from all other classes of the community.
The purpose of the Government's policy is to give assistance where assistance is required to relieve real hardship, as distinct from relative hardship, which a fall in the value of money is bound to inflict upon all those who live upon fixed incomes. As I have said before, the amount of assistance given must depend upon the amount of money available and upon the numerous conflicting claims with which any Government are faced. For those reasons, it would be quite wrong for my right hon. Friend to hold out any hope of an all-round increase.

10.33 p.m.

Lieut.-Colonel Marcus Lipton: I have never heard a weaker or more unsatisfactory reply given at the Dispatch Box. I hope that further opportunities will present themselves of raising this matter again. It cannot be right that such an injustice should be perpetuated ad infinitum. The Under-Secretary of State


has not adduced a single valid argument for the perpetuation of this injustice, and I hope that hon. Members on both sides of the House will keep on raising this matter until whatever Government are in power are pestered into seeing that justice is done.
The hon. and gallant Member for Totnes (Brigadier Rayner) said that it was a limited liability. It is more than that; it is a diminishing liability, because the number of people concerned is diminishing. I hope that further pressure will be brought to bear upon this Government and any succeeding Government until justice is done.

Hon. Members: Hear, hear.

10.34 p.m.

Mr. Anthony Marlowe: The House deplores the speech of the Undersecretary of State. He completely failed to address his mind to the problem. The case of these officers is undoubtedly distinct from that of other persons, because a promise was made in 1919. His answer seems to be, "What is the difference between making a promise and breaking a promise?" It was most——

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. Speaker adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-five minutes to Eleven o'clock